Chinese Analysts' Views on U.S. Semiconductor Sanctions
Put money where the pain is
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We dug through more than a dozen Chinese broker research reports on the latest US semiconductor sanctions. Here is a summary of what we found.
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Timeline of Events
May 15, 2019 Huawei is added to the Entity List by the U.S. Department of Commerce, the Bureau of Industry and Security (BIS).
June 21, 2019 The BIS adds more Chinese tech companies to the Entity List, including Sugon (computers), Hygon and Haiguang (both semiconductors).
May 15, 2020 TSMC announces intention to build and operate an advanced node fab in Arizona, in partnership with the U.S. federal government.
December 18, 2020 The BIS puts SMIC on the Entity List and restricts its access to “key enabling technologies”.
January 20, 2021 Joe Biden takes office as the new U.S. President.
April 8, 2021 The U.S. adds seven more Chinese super-computing players to the Entity List for alleged supporting “China’s military modernization”.
June 6, 2021 White House releases the “Building Resilient Supply Chains” report, ranking semiconductor manufacturing as No. 1 on the agenda.
July 6, 2022 The U.S. government pressures ASML to stop selling deep ultraviolet (DUV) lithography machinery to China. This is a critical piece of equipment for making advanced semiconductors.
July 30, 2022 The U.S. further tightens export restrictions on semiconductor production equipment (SPE). Lam Research and KLA-Tencor are asked not to sell 14nm or below equipment to China.
August 9, 2022 The U.S. Congress passes the CHIPS Act.
August 12, 2022 The U.S. announces an export ban on electronic design software (EDA) for advanced IC design in China (3nm or below).
August 13, 2022 The U.S. launches an export ban on high-performance graphics processing units (GPUs) to China.
August 31, 2022 The U.S. bans Nvidia and AMD from selling advanced artificial intelligence (AI) chips to China.
October 7, 2022. The BIS announces another set of comprehensive sanctions on Chinese semiconductors, including restricting U.S. persons from working in the Chinese semis industry.
Chinese Analysts’ Views
Most sell-side analysts believe the increasing U.S. sanctions will act as a stimulus and accelerate the growth of the Chinese semiconductor supply chain.
Regarding the SPE ban, Chinese equipment vendors can fulfill most of the domestic production needs, such as etching, thin film deposition, ion implantation, wafer cleaning, photo-resist coating and development. (Essence Securities)
Qi’s take: “Most” is not good enough. The semiconductor production line stops completely if one piece of equipment is missing or stops working. Advanced lithography (ASML) is key. China is years away (if not decades away) from developing its own DUV lithography machines.
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