To increase self-sufficiency in the semiconductor sector, China has launched the third phase of its National Integrated Circuit Industry Investment Fund, commonly known as Big Fund III. Established last week, this new fund boasts a registered capital of 344 billion yuan (approximately $47.5 billion), making it the largest state-backed investment in China’s semiconductor industry to date.

Big Fund III is designed to support various segments of the semiconductor industry, including contract manufacturers, equipment suppliers, and material providers. The primary objective is to bolster domestic capabilities and reduce reliance on foreign technology, particularly in the face of escalating US tech sanctions. 

Leading beneficiaries of this substantial investment include Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor. Additionally, equipment suppliers such as Naura Technology Group and Advanced Micro-Fabrication Equipment, along with raw material providers like National Silicon Industry Group, are set to gain significant support.

Big Fund III is seen as a countermeasure to the US Chips and Science Act of 2022, which allocated $53 billion to boost the American semiconductor industry. China’s strategic goal with this fund is to build a robust, self-sufficient semiconductor industry capable of withstanding external pressures and restrictions. The fund comprises 19 equity investors, led by China’s Ministry of Finance

Historical Background and Challenges

This latest fund follows two previous phases: the first, launched in 2014 with an initial financing of 138.7 billion yuan, and the second in 2019, which raised 204.1 billion yuan. Despite past successes, such as fostering companies like Yangtze Memory Technologies Corp and ChangXin Memory Technologies, the industry has faced significant challenges. Notably, US export controls have hindered access to advanced chip-making equipment, impacting production yields and cost efficiency.

The fund’s previous management faced corruption issues, with former president Ding Wenwu under investigation since July 2022. Zhang Xin, the current president, has taken over with a focus on transparency and effective investment.

The fund’s focus is on capacity expansion, equipment, materials, and advanced packaging. However, narrowing the technology gap with global leaders remains a challenge due to ongoing export restrictions.

Related:

• U.S. predicted to win the semiconductor war against China, will triple Semiconductor manufacturing capacity by 2032 says report
• US pressure fails to slow down China’s semiconductor rise: South Korea feels the heat
• Huawei becomes a strong competitor to Nvidia in China’s AI chip market

(via)

The post China launches $47.5 billion Big Fund III to boost semiconductor self-sufficiency appeared first on Gizmochina.

In 2023, China’s semiconductor sector faced formidable challenges as escalating US tech sanctions tightened restrictions on access to advanced chip-making tools and AI processors. The US, in October, extended export controls on semiconductor wafer fabrication equipment, strategically limiting China’s access to less advanced Nvidia data center chips. This move was part of a broader effort to curb China’s technological advancement, with the successful persuasion of Japan and the Netherlands to join in restricting exports of advanced semiconductor tools.

These sanctions exposed vulnerabilities in China’s chip supply chain, prompting the country to intensify efforts toward self-sufficiency in semiconductors. State funding supported initiatives for domestic production of less-advanced tools and parts, leading to notable progress. However, challenges persisted in developing high-end lithography systems crucial for advanced integrated circuits.

In a breakthrough, Shanghai Micro Electronics Equipment (SMEE), backed by state-owned Shanghai Zhangjiang Group, announced China’s first 28-nm lithography system. Though not on par with leading-edge EUV lithography systems, this milestone marked a crucial development for China’s focus on mature chip technology.

With Western restrictions on purchasing advanced tools, China is expected to continue investing in mature process nodes, particularly those at 28 nm and older technologies. By the end of 2024, the capacity for mature chip production is set to expand at 32 Chinese fabs, leading to a significant increase in China’s global share of mature capacity. TrendForce predicts China’s global share of mature capacity to reach 39% by 2027, triggering concerns from the EU and US.

However, the semiconductor market faced headwinds globally in 2023, impacting Chinese chip makers. SMIC experienced a 15% year-on-year decline in third-quarter revenue, while Hua Hong Semiconductor reported a 9.7% decline in revenue. The challenging market conditions were attributed to softening chip demand and elevated inventory of consumer and mobile devices.

In response to these challenges, the US Department of Commerce initiated a Semiconductor Supply Chain Review to address national security concerns linked to Chinese-sourced chips. The survey aims to identify how U.S. companies source legacy chips and is part of a broader plan to allocate nearly $40 billion in subsidies for semiconductor chip manufacturing. Commerce Secretary Gina Raimondo expressed concerns about China’s expansion of legacy chip production, framing it as a matter of national security.

China’s embassy in Washington accused the US of stretching the concept of national security and engaging in discriminatory treatment. The Commerce Department’s report revealed China’s substantial semiconductor subsidies, creating an “unlevel global playing field.” Raimondo anticipates significant semiconductor funding awards within the next year to reshape the US chip production landscape, emphasizing the importance of addressing non-market actions threatening the US legacy chip supply chain.

As China continues to navigate these challenges and the US aims to secure its semiconductor supply chain, the semiconductor industry is transforming, shaped by geopolitical factors, market conditions, and the pursuit of technological self-sufficiency.

Related:

• Unisoc quietly launches a new mid-range 5G chip platform, the T765 5G
• Netherlands Halts Advanced Semiconductor Exports to China
• Beijing Unveils Powerful AI Computing Platform Amid Semiconductor Tensions

(via)

The post China’s Semiconductor Landscape in 2023: Breakthroughs, Challenges, and Global Implications as the Industry Forges Ahead into 2024 appeared first on Gizmochina.

In a remarkable uptick, Chinese imports of chipmaking equipment witnessed an astonishing 90% surge in the last quarter, reaching a total value of $8.7 billion, as reported by Nikkei’s analysis of Chinese customs data. Notably, lithography equipment imports experienced an unprecedented fourfold increase, with a sixfold surge from the Netherlands alone, following the imposition of export controls by the Dutch government in September.

ASML, a leading player in lithography equipment, saw China’s share in its sales skyrocket to 46% last quarter, a substantial leap from 14% in 2022. Despite concerns that these imports might be used for high-end semiconductor production, ASML’s CFO emphasized that the shipments were designated for mid-critical and mature production processes, circumventing the advanced semiconductor sanctions.

The geographical breakdown of imports indicates a shifting landscape. Japanese imports increased by 40%, with contributions from Tokyo Electron’s specialty in lithography and etching equipment. Meanwhile, imports from the U.S. grew by 20%, although the American share dropped to 9% from 17% in 2021. Dutch imports surged to 30%, and Japan’s share declined to 25% from 32%.

Export restrictions imposed by the U.S., Japan, and the Netherlands in October 2022 triggered concerns about the potential misuse of imported equipment. The Semiconductor Industry Association urged stronger coordination among allies to maintain a level playing field in response to expanded U.S. curbs.

China’s Semiconductor Market:

In the global market, China emerged as the largest market for semiconductor production equipment, representing 29% of global sales in the April-June quarter, according to trade group SEMI.

The highlight was, Huawei’s release of a 5G smartphone featuring a homemade advanced 7-nanometer chip despite U.S. restrictions. Questions, however, lingered about the fabrication sources as Huawei faced limitations on using American equipment.

The current U.S. efforts to restrict chip exports to China, focusing on EDA tools and capital equipment, aim to curb China’s drive toward semiconductor self-sufficiency. While China boasts a large chip market demand and government support, it faces challenges in dependency on key inputs like EDA and capital equipment. As China aims to expand in mature nodes like 28 nm, it faces reluctance from Europe and Japan and limited acceptance in foreign markets. 

The surge in chip equipment imports by China raises significant global concerns and underscores the complex dynamics shaping the semiconductor industry.

Related:

• China is Investing in High-Tech Manufacturing, Ranging from EVs to Semiconductors
• China’s Chip Industry remains largely unaffected by US sanctions
• Chinese chipmaker YMTC takes legal action against Micron for Patent Infringement amid escalating US-China tensions

(via)

The post China’s Chip equipment imports surge, fueling global concerns appeared first on Gizmochina.

China’s semiconductor industry is making remarkable strides, despite challenges posed by US sanctions. Key players like SMIC and Huawei are at the forefront of this revolution. Huawei recently unveiled a cutting-edge 7-nm processor manufactured by SMIC, showcasing its prowess in chip technology. Notably, SMIC is on the verge of producing 5-nm chips utilizing existing ASML Holding NV machines, indicating significant advancements in chip manufacturing capabilities.

Former TSMC vice-president, Burn J. Lin, highlighted China’s relentless progress, emphasizing that US sanctions failed to hinder collaborations between Huawei and SMIC. Lin argued that attempting to curb China’s chip technology improvement is futile, urging the US to focus on maintaining leadership in chip design instead.

One of the groundbreaking aspects of China’s advancements lies in potential innovations. Chinese researchers are experimenting with new materials and chip packaging techniques, paving the way for more powerful semiconductors. This experimentation signals a shift in the global semiconductor landscape.

Furthermore, the concerns and debates surrounding China’s chip industry are intensifying. While there are debates in the US regarding the effectiveness of containment campaigns, there are also worries about the potential military applications of China’s advanced chip technology, such as the 7-nm processor developed by Huawei.

Despite these concerns, Chinese companies are forging ahead. Yangtze Memory Technologies Co. recently produced advanced memory chips, showcasing China’s resilience against US sanctions. TechInsights’ discovery of a 232-layer quad-level cell 3D NAND die further underscores China’s progress in memory chip technology.

The impact of these advancements is not limited to China alone. Burn J. Lin stressed that attempts to limit China’s progress adversely affect the global economy. China’s comprehensive strategy, embracing a whole nation approach, reflects a long-term commitment to boosting its chip industry. As the industry continues to evolve, the world watches closely, anticipating further breakthroughs and collaborations in the ever-expanding semiconductor arena.

Related:

• Chen Nanxiang Charts a Path for China’s Semiconductor Future Amid US Restrictions
• China’s Semiconductor imports plummet amidst US sanctions, fueling rise in smuggled AI Technology
• US grants indefinite waivers to South Korean Tech Giants, ensuring stable Semiconductor supply chain

(via)

The post China’s Chip industry advances despite US Sanctions appeared first on Gizmochina.

In a recent report, the Semiconductor Industry Association (SIA) announced that the global semiconductor sales for 2022 stand at $573.5 billion, showing a 3.2% increase from last year. China still holds the number one position in the semiconductor market which accounts for one-third of the global revenue. This is also the highest global sales ever reported by the industry, despite the ongoing US-China tech war and economic downturn.

SIA President and CEO, John Neuffer, said that the global semiconductor market experienced significant ups and downs in 2022, with record-high sales early in the year followed by a cyclical downturn taking hold later in the year.  

He further added that despite short-term fluctuations in sales due to market cyclicality and macroeconomic conditions, the long-term outlook for the semiconductor market remains incredibly strong, due to the ever-increasing role of chips in making the world smarter, more efficient, and better connected.

Why are semiconductors important?

Semiconductors are one of the most important technology items of the era. . All the major technology sectors, like wired communication, consumer electronics, industrial electronics, automotive electronics, wireless communication, and computing and data storage, require semiconductors. Advancement in artificial intelligence, military and weapons systems, space technology, and more is not possible without having the latest and cutting-edge semiconductor tech.

Semiconductors are divided on the basis of circuit design and function. As per the integrated circuitry, the semiconductors can be classified as digital, analog, and mixed and as per functionality they are classified as memory chips, microprocessors, standard chips, and complex systems-on-a-chip (SoCs). 

In 2022, microprocessors generated the highest revenue of $176 billion followed by memory chips which reported sales of $130 billion.  The biggest revenue jump was seen in analog chips used in automobiles, computers, and other consumer goods. Analog chips reported $89 billion in revenue, a 7.5% increase in 2022. 

China’s Semiconductor Industry:

China the world’s largest semiconductor market accounted for almost one-third of the global sales. The Chinese semiconductor industry plays a major role in the technology sector of the country, which accounts for almost 30% of its GDP. The semiconductor industry includes a wide variety of companies, from integrated device manufacturers to pure-play foundries, fabless semiconductor companies, and OSAT companies.

Currently, China’s semiconductor industry includes a wide variety of companies from Fabless semiconductor firms like ZhaoXin, UNISOC, and HiSilocon to IDMs (Integrated Device Manufacturers) like Yangtze Memory Technology Corp and ChangXin memory Technologies.

China which aims to become the global leader in artificial intelligence and quantum computing needs an uninterrupted supply of semiconductors to achieve this target. However, the country is facing huge pressure under the US sanctions on the semiconductor export to China. 

Last year US introduced increased restrictions on semiconductor exports to China to stop its advancement in AI and disrupt its progress in chip making. These restrictions stopped US companies and some of its allies like the Netherlands and Japan from providing machines, tools, personnel, and technical know-how to Chinese companies.

The sanctions and additional restrictions on China have made a global impact as, despite the increase in total sales, the second half of 2022 reported a gradual decrease in revenue.  The fourth-quarter sales of $130.2 billion were 14.7% less than in the same period in 2021 and 7.7% lower than in the third quarter of 2022. Global sales for the month of December 2022 were $43.4 billion, a decrease of 4.4% compared to November 2022. 

• Semiconductor Industry Association asks Japan and Netherlands to Tighten Curbs on China
• South Korea Caught in the Middle of US-China Tech War: Chip Sale down by 50% in January
• US and India Join Forces Against China in Critical Technologies
• The Best OnePlus 11 Alternatives in India

(via)

The post China Holds its Spot as the Largest Semiconductor Market in 2022 appeared first on Gizmochina.