Yesterday, SMIC, a leading semiconductor manufacturing company in mainland China, set off a wave of upsurge, especially in Hong Kong stocks. SMIC rose 8% yesterday afternoon. There are two main reasons for this.
First of all, an insider gave the exact news that after months of negotiations and efforts, SMIC has obtained a license to purchase relatively advanced equipment from US semiconductor equipment manufacturers. It is reported that these equipment are mainly used for mature process technology. This is an export-restricted company listed by the U.S. Department of Commerce in October last year (the Bureau of Industry and Security of the U.S. Department of Commerce issued a letter to some U.S. suppliers that some U.S. equipment, accessories and raw materials exported to SMIC will be subject to U.S. export controls The further restrictions stipulated, must be applied for an export license in advance, can continue to supply to SMIC), after negotiation, a major progress has been made.
Secondly, also yesterday, the State Council Information Office held a press conference. Tian Yulong, Chief Engineer and Spokesperson of the Ministry of Industry and Information Technology, said that the Chinese government attaches great importance to the integrated circuit industry, and issued policies to promote the high-quality development of the integrated circuit industry and software industry. Improve relevant environmental policies for high-quality development of the chip and integrated circuit industries. Especially in the upstream areas of the industrial chain such as semiconductor manufacturing, process and equipment, it has always been the focus of policy and financial support. This news is obviously a good news for SMIC, the leading domestic foundry, and has played a role in promoting its stock rise.
Compared with the press conference of the State Council Information Office, SMIC’s license to purchase US semiconductor equipment is more worthy of attention. At the end of last year, it was speculated that with the new US president taking office, his policies towards Chinese companies in the high-tech field will be partially adjusted, and semiconductor equipment is a very important part of China-US high-tech trade. This time, SMIC’s license may reflect previous speculations from one aspect. U.S.-China semiconductor trade shows signs of further easing.
In fact, in the past two years, the semiconductor industry of China and the United States seems to be “opposed”, but with the advancement of time and the development and changes of the industrial environment, the meaning of “unification” of the two semiconductor markets has become stronger and stronger, and there are many In terms of performance, such as the government’s policy support and capital investment in the semiconductor industry, the supply and demand relationship of semiconductor manufacturing equipment, the high similarity of chip manufacturing, especially the process characteristics, and the dependence of the chip supply and demand market.
Convergence of semiconductor support policies
In recent years, the Chinese government has been vigorously supporting the local semiconductor industry, especially for the semiconductor manufacturing and equipment industry in the upstream of the industrial chain, pouring more energy and financial resources. Only by laying a solid foundation can the chip industry continue to innovate and develop; it is also continuing to increase tax cuts for related companies. These policies have given a great impetus to the development of enterprises for integrated circuit companies to reduce or exempt corporate income tax from the profit-making year. The development of the chip industry also depends on talents. Therefore, in terms of talent reserve and talent training, the government and the country have adopted a series of measures. The most notable measure is to set the integrated circuit major as a first-level discipline in relevant colleges and universities. In addition, it is the launch of the “big fund”. At present, the first phase has basically completed its mission, and the second phase is playing a role in the local semiconductor market.
As China’s semiconductor industry policy continues to play a role, the United States also sees the need to adjust the government’s industrial policy, rather than relying on the single role of the market. Since 2020, SIA has made proposals to the government many times, suggesting the introduction of corresponding new policies for the semiconductor industry, especially in terms of government funds, which requires more investment. For example, SIA has proposed a $37 billion industry support proposal, of which $5 billion is used as federal grant funds to build a new semiconductor factory, which is jointly operated and operated by the government and private enterprises. In addition, 15 billion US dollars will be used as comprehensive subsidies for the states, mainly as subsidies for the states to attract investment and set up factories, and 17 billion US dollars will be used for research and development. The SIA sought bipartisan support for the proposal last year, when Republican and Democratic senators also introduced a bill that would allocate $110 billion for technology spending, including semiconductor research. More recently, new U.S. President Joe Biden signed an executive order seeking $37 billion in funding for legislation to strengthen stateside chip manufacturing.
High dependence on semiconductor equipment
In the past year, due to the increasingly unbalanced global chip supply and demand relationship and the serious shortage of production capacity, the pace of global wafer fab expansion has accelerated, and it has been passed to the upstream of the industry chain. The amount is calculated on a monthly basis and has repeatedly hit new highs, reaching its peak in January this year. According to the January Equipment Market Data Report released by SEMI, the North American-based semiconductor equipment maker achieved sales of $3.04 billion in January 2021, with monthly revenue reaching $3 billion for the first time, up from $2.68 billion in December 2020 The U.S. dollar was 13.4% higher and 29.9% higher than January 2020’s $2.34 billion. It can be seen that the current semiconductor equipment market environment is very good, and no manufacturer is willing to miss this money-making opportunity.
These devices are mainly sold to three major markets, namely Taiwan, China and South Korea. In the face of such a huge market demand, especially in mainland China, the demand for equipment is increasing year by year, and there is still a lot of room for expansion in the future. At the same time, the U.S. related semiconductor equipment export restrictions are obviously unwilling to be seen by major North American equipment manufacturers. For a long time last year, they have filed supply applications in order to seize this period of global chip production capacity shortage. time.
At the same time, while Chinese fabs are seeking to obtain a license to purchase U.S. semiconductor equipment, they are also demanding other solutions. As the world’s second largest supplier of semiconductor equipment, Japan has naturally become the main target. According to the Nikkei, Chinese fabs are stepping up their rush to buy used chip-making equipment, pushing up equipment prices in Japan’s secondary market. Japanese used-equipment dealers say equipment prices are up 20 percent from last year. China does this mainly because these older devices are not subject to US restrictions. “Nearly 90 percent of the used equipment will be shipped to China,” said a source at Mitsubishi UFJ Leasing Finance.
A market source said some Chinese fabs were buying the equipment, if not immediately.
The pursuit of Japanese semiconductor equipment is also stimulating American semiconductor equipment manufacturers. This time, SMIC has obtained the license to purchase related equipment from the United States, which also reflects the pragmatic side of the related policies of the United States, that is, in the face of the huge market demand in mainland China, it is more in line with commercial interests to comply with the interdependence between the two major markets of supply and demand. Of course, this is just the beginning. For both the supply and demand sides, there is still a lot of work to be done in the future. After all, advanced process equipment is still prohibited from being sold to fabs in mainland China.
Chip manufacturing is similar
The chip manufacturing industry in the United States is very developed and has a relatively long history, while the chip manufacturing industry in mainland China is still in the growth stage and relatively young. The two seem to be very different. But if you look closely, the two markets are very similar.
The IDM industry in the United States is very developed and has a long history, but the foundry industry is not very strong. Except for GF, the other few foundries are limited in scale and have little market influence. Whether it is an IDM or a wafer foundry, most American companies are good at mature process technology, but dabble in advanced process. Especially manufacturers such as TI, ADI, Skyworks, Qorvo, etc., their products are mainly based on analog chips, and advanced processes are rarely used. Intel is one of the few manufacturers in the United States that mass-produces chips with more advanced process technology, but compared with several major fabs in Taiwan and South Korea, Intel’s advanced process is also far behind.
The fabs in mainland China that are in the growth stage are also based on mature process technology. In this regard, the two major markets of China and the United States have a high degree of similarity, as shown in the figure below.
Source: IC Insights
As can be seen from the figure, among the 7 major regions in the world, the proportions of the 5 major types of process technology are the most similar in the United States and mainland China, and can even be said to be the same, while the differences in other regions are obvious.
It is precisely because of this that there are more similarities in the industrial chain of the chip manufacturing industry in the United States and mainland China, as well as similar or the same needs, such as similar requirements for semiconductor materials and equipment, and the categories and applications of manufactured chips. fields are similar. Based on this, the two major chip manufacturing markets in China and the United States will reflect an increasingly “closer” relationship, and there may be more and more similarities in the demand for each link of the industrial chain and the coordinated development of the industry.
Above, from the aspects of semiconductor industry policy, supply and demand of semiconductor equipment, and chip manufacturing technology, we have introduced the similarity and close relationship between Chinese and American semiconductors. This increasingly “unified” state adds more and more room for imagination to the originally “opposed” relationship. With the growth and expansion of China’s chip manufacturing industry and the gradual maturity and improvement of the local supply chain, the relationship between the semiconductor industry policies, semiconductor equipment supply and demand, and chip manufacturing technology in the two major markets of China and the United States may become closer.
The Links: 6MBP30RTB060-50 LQ10D213 SHARP-LCD