Beijing [China], November 17: Even before Donald Trump officially returns to the White House, China's semiconductor industry has faced major difficulties, but it may also be an impetus for Beijing to increase its autonomy in this field.
On November 16, Nikkei Asia reported that China's CSI Semiconductor Index (CSI931865) has increased for six consecutive sessions since the US presidential election results on November 5. This is an index that evaluates semiconductor companies on the Chinese stock market.
Take difficulties as motivation?
CSI931865 has risen 26% since the beginning of the year, outperforming the 12% gain of the Shanghai Composite Index. The increase is also higher than the 20% increase of SOX - a similar index on the NASDAQ (US).
The increase in CSI931865 is believed to be because Chinese semiconductor companies will have growth opportunities as they play an increasingly larger role in the domestic market amid the country's limited access to advanced semiconductor chip technology, supplies and products.
Empyrean Technology, which makes automated tools for designing chips, has been the third-highest gainer in China's overall stock market recently, as it is expected to dominate the Chinese market as U.S. rivals such as Synopsys and Cadence Design Systems are restricted from accessing the mainland. Nexchip Semiconductor, which is the fourth-highest gainer in China, has risen more than 20% since its 2023 initial public offering.
Active preparation but not small challenge
Perhaps, having learned from facing sanctions during Trump's first term (2017 - 2021) as well as President Joe Biden's subsequent term (from 2021), Chinese semiconductor companies are preparing as much as possible as the US-China trade war is expected to escalate further under Trump.
China has increased its purchases of semiconductor equipment from abroad, Reuters reported, citing data from China Customs. From January to September 2024, China's semiconductor equipment imports increased by more than 30% year-on-year to $24.12 billion. Of this equipment, $7.9 billion was spent on lithography machines, which are needed to produce the most advanced chips. China's investment in lithography machines increased by 35.44% year-on-year. Most of the lithography machines China bought came from ASML (Netherlands) - worth up to $7 billion, accounting for more than 88% of the total value of $7.9 billion.
However, ASML Holding has supplied its most advanced deep ultraviolet (DUV) lithography machines to China this year. According to the US's request from 2023, ASML is only allowed to supply some older generation DUVs to China. Since 2019, the US has also requested ASML to stop selling extreme ultraviolet (EUV) lithography machines to China. Restricted access to advanced lithography machines has caused difficulties for the Chinese semiconductor industry. This is also a major challenge for China in the process of becoming self-sufficient in the semiconductor industry. Because of China's development over the years, it has only recently launched a lithography machine operating at a wavelength of 193 nm, achieving a resolution of less than 65 nm and a thin coating with a precision of less than 8 nm.
Meanwhile, ASML's DUV can achieve resolutions below 38 nm and thin-layer precision down to 1.3 nm. ASML's EUV machines can achieve even higher resolutions. And without lithography machines at the level of ASML's equipment, China will have a hard time producing advanced semiconductor chips on its own.
Not only that, even before Mr. Trump took office, Reuters has just quoted a private source revealing that since November 11, the US Department of Commerce has banned TSMC (Taiwan) - the world's largest advanced semiconductor chip manufacturing corporation - from supplying advanced semiconductor chips to mainland China. This has caused many difficulties for the Chinese technology industry as it still needs a lot more time to increase its self-sufficiency.
Source: Thanh Nien Newspaper
