Chinese Chipmakers Are Embroiled In A Tech Dispute Between The US And China

The United States has made China’s semiconductor industry a priority, imposing a series of export restrictions upon many parts of the country’s chip sector supply chain in an effort to slowdown its rival’s technological advancement.

While Beijing has invested heavily in developing a domestic chip industry, its fabrication plants, known as fabs, continue to rely heavily on foreign-made equipment to turn slabs of silicon into chips that power hardware.

The following Chinese factories are bearing the brunt of Washington’s tariffs:

SMIC, China’s largest fab, manufactures chips used in a variety of automotive, internet-of-things, and smartphone products.

Founded in 2000 with backing from the Shanghai government, the company is China’s potential rival to Taiwan Semiconductor Manufacturing Co Ltd (TSMC), though it is technologically and financially dwarfed. TSMC is the world’s most valuable chipmaker, with major clients including Apple Inc. and Nvidia Corp.

Its government backing and ambition to produce high-end chips piqued the interest of the United States, which placed the company on its Entity List in 2020. The transaction effectively barred Dutch firm ASML Holding AS from supplying critical Extreme Ultraviolet lithography machines to SMIC, effectively putting an end to that ambition.

Currently, the majority of SMIC’s sales are made using the obsolete 45 nanometer process node and above. Due to a global shortage of lower-end chips, this specialisation in older chips has proven beneficial since late 2020.

Nonetheless, its global market share in the pure-play foundry sector remains in the single digits, and its sales and R&D expenditure remain significantly lower than TSMC’s.

In 2022, researchers discovered that the company had produced a chip that appeared to share properties with TSMC’s 7 nanometer process node technology, despite the lack of ASML equipment.

Experts questioned the breakthrough’s long-term viability. SMIC has not commented on the findings.

Hua Hong Semiconductor Ltd is the second-largest fab in China. It was founded in 1996 and specializes in mature-node technology, with the majority of its revenue coming from chips manufactured at the 55 nanometer process node and above.

SMIC has invested more resources in producing advanced nodes. It intends to hold another public offering in 2023 and to construct a new fab in the eastern city of Wuxi.

Yangtze Memory Technologies Co Ltd (YMTC) is China’s sole player in the global NAND memory market, which has long been dominated by a few firms from the United States and Korea. It designs and manufactures chips and was added to the United States Entity List last year.

While YMTC’s overall market share is small, experts say it has steadily entered the Chinese supply chain and its products have become more competitive in terms of price and quality.

It unveiled a chip with 232 layers of memory cells last year, bringing it closer to rivals like South Korea’s Samsung Electronics Co Ltd. According to experts, export restrictions on equipment are likely to derail future efforts.

YMTC was founded in 2016 with funding from the Wuhan government and the China National Integrated Circuit Industry Investment Fund, and was previously known as Tsinghua Unigroup. It was later spun off as its parent company restructured in order to avoid bankruptcy.

Changxin Memory Technologies (CXMT) is China’s sole major player in the design and manufacture of DRAM chips, which, like NAND memory, has long been dominated by a small number of legacy companies in the United States, South Korea, and Taiwan.

It currently operates one fab and is constructing two more. It manufactures DRAM at the 19 nanometer node and is transitioning to the 17 nanometer node – process nodes that lag behind the industry’s leading-edge.

According to Trendforce, the impact of equipment export restrictions imposed since October may have an impact on expansion plans.

(Adapted from

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy

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