US starves China of semiconductors

WASHINGTON: China’s semiconductor industry is facing renewed pressure from the United States and its allies after Japan announced on May 23 that it would impose export restrictions on 23 types of chipmaking technology, including advanced semiconductor manufacturing equipment.

The measure will come into effect in July. The move comes after the US and the Netherlands introduced similar measures in recent months as Washington and its allies try to limit China’s access to advanced semiconductor chips and equipment.

Last October, the US government introduced a series of export controls on advanced semiconductor chips. Since then, Washington has been lobbying the Netherlands and Japan to join its efforts to limit the development of China’s semiconductor sector.

In a statement, a spokesperson for the Chinese Commerce Department said Beijing “strongly opposed” Tokyo’s decision to impose export control on items related to advanced semiconductor manufacturing, saying the move goes against free trade and international trade regulations and it’s an abuse of export control measures.

Some Chinese semiconductor industry executives have expressed concern over the potential impact of Japan’s measures and experts said they will “stifle” China’s attempt to develop new processes to manufacture advanced semiconductor chips in the future.

“The development of China’s semiconductor industry will likely be limited to the 14 nanometers (nm) process, and it will be more difficult for China to move beyond this standard in the future as they won’t be able to get advanced equipment from Japan, the US or the Netherlands,” Pei-Chen Liu, an expert on the semiconductor industry in Asia Pacific at the Taiwan Institute of Economic Research, told DW. Nanometer node is related to different generations of chip manufacturing technology and the most advanced chips are around 3 nm, which are mostly for smartphones, while more mature semiconductor chips are around 28 nm or above, which are for vehicles or household electronics.

Since Japan’s export control could potentially have an impact on China’s semiconductor industry, the latest move could also impact a lot of related industries, and a lot of manufacturers that produce consumer electronics.

“There is no technological achievement more difficult than producing high-quantity commercial chips, particularly when you get into smaller nanometer sizes,” said Alex Capri, lecturer at the National University of Singapore (NUS).

He said that as the value chain is dominated by the US, Japan, South Korea, Taiwan, and the Netherlands, they are more “prone to” cooperate with Washington, even though the Chinese market is important for their sales. “If the group of five are engaging in friend-shoring, it’s going to be expensive but they will be able to pull that off in the mid- to long term,” he told DW.

However, for China the goal of becoming fully self-reliant in terms of semiconductor manufacturing and development will be an “almost impossible task,” Capri continued. “Assuming these alliances hold, this is going to set back China’s objectives of becoming totally self-sufficient for years, because it’s incredibly difficult.”

“While the US government decides to sanction China, the Semiconductor Industry Association thinks the government needs to do it in a way that doesn’t hurt American companies or companies from ally countries too much,” said Roberts from the Atlantic Council.

This article was provided by Deutsche Welle