Reports Are Surfacing Among Chinese Analysts And On Social Media Suggesting That US Could Ease Sanctions On SMIC Chip Shortage.
Reports Are Surfacing Among Chinese Analysts And On Social Media Suggesting That The US Could Ease Sanctions On Semiconductor Manufacturing International Corporation (SMIC), the country’s most advanced chip maker, so that it can fast-track production of mature 14-nm and 28-nm chips to help ease the current global shortage.
SMIC, which is listed in Hong Kong, did not directly confirm if the reports were accurate, but it said in a statement on Tuesday that it would cooperate with its supply partners to ensure the “continuity in production and its capacity expansion”, adding that uncertainties still remain.
The Shanghai-based semiconductor foundry is building a 28-nm wafer production line in the Beijing Yizhuang economic development zone, with planned capacity for 100,000 12-inch wafers per month upon completion of the project’s first phase. Relaxed US restrictions on SMIC, if confirmed, would be an important sign of easing in US-China tech tensions under US President Joe Biden’s administration.
The speculation has emerged against the backdrop of chip shortages that have hurt the automobile industry, with US carmakers including Ford, General Motors and Tesla reportedly cutting back on production. Unlike iPhones and other advanced electronics that require 7-nm or smaller chips, the microcontrollers and driver integrated circuits (ICs) typically used in cars are fabricated with mature technologies like 14-nm and 28-nm.
Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm ICwise, wrote in a social media post on Monday that some American equipment suppliers have obtained licenses to export certain types of equipment to SMIC, but he did not provide the source of his information. The US Department of Commerce has not made any announcement regarding approval of export licenses to SMIC, nor have any US equipment suppliers.
Email inquiries sent outside US business hours to chip equipment suppliers Applied Materials, Lam Research and the commerce department were not immediately answered on Wednesday. SMIC counts Applied Materials and Lam Research as two of its three top foreign equipment suppliers, alongside Dutch lithography supplier ASML, according to SMIC’s IPO prospectus. However, industry insiders said a relaxation in the US restrictions is possible and that such a move would secure SMIC’s production capability for mature nodes.
“China still cannot build a wafer production line using its home-grown technologies despite domestic substitutes for a small amount of materials and equipment,” said a semiconductor analyst with a commercial bank, who declined to be identified. This view was echoed by an executive at STMicroelectronics, a European auto chip supplier, who said China “will probably not be able to operate” lines with mature nodes such as 45-nm without foreign suppliers.
During its fourth-quarter earnings conference call in February, SMIC’s co-CEO Zhao Haijun said the company would invest US$4.3 billion in capital expenditure this year, which exceeds its 2020 total revenue of US$3.9 billion, with most of the money supporting the expansion of mature processing capacity. In the fourth quarter, mature nodes such as 55- and 65-nm contributed 34 per cent of total wafer revenue, the biggest contributor to revenue across all nodes, up from 31 per cent in the same period a year earlier.
Semiconductor prices are on the rise as demand is outstripping supply, with wafer fabs unable to quickly ramp up production due to the complex process involved in making chips. “Consumer devices are starting to see price/margin pressure at the retail level, ” said Paul Gagnon, senior research director at Omdia, a technology research firm, in a report issued on Tuesday.
He said constraints on driver ICs are putting pressure on display panel producers that are raising prices, and in turn pressuring consumer devices at the retail level.
This news was originally published at SCMP.