Japanese media said SMIC stored grain for the winter and purchased a large number of key equipment from Europe, the United States and Japan

category:Finance
 Japanese media said SMIC stored grain for the winter and purchased a large number of key equipment from Europe, the United States and Japan


Stock price trend of SMIC A shares

Recently, the Nikkei Asia review reported that in recent years, midcore international has been preparing for the United States to tighten export restrictions, purchasing large quantities of key production equipment and important replacement parts from the United States, Europe and Japan, and the purchase volume has exceeded the companys demand for the whole year of 2020.

SMIC is working with other Chinese chip manufacturers to establish a central warehouse for shared reserves of such key components, the industry said.

According to the A-share prospectus, most of SMICs major material and equipment suppliers are overseas companies, respectively from Japan, South Korea, the Netherlands, the United States and other countries. Over the past year, the company has repeatedly placed orders with Fanlin group, applied materials and Tokyo electronics to purchase wafer production equipment.

Shares of major global chip manufacturers photo source: Nikkei news

SMIC has ordered more machines than it needs for its current expansion plan. We have already shipped some machines, but there are still more to be delivered on order by the end of this year. Now we are not sure if we can deliver, but we know SMIC has been communicating with the U.S. government this year, said an American chip equipment manufacturer

SMIC has been on high alert since the beginning of this year, when the industry realized that the United States may further restrict Huaweis non-U.S. suppliers from using U.S. technology, the report quoted people familiar with the matter as saying. SMIC is eager to buy a large number of parts for existing chip production equipment, which will be used to ensure business continuity in the event of any restrictions, the person said.

It is worth mentioning that, although it has been repeatedly clarified that it has nothing to do with the Chinese military and has not produced for any military end-users, SMIC confirmed last night (October 4) that some of the US equipment, accessories and raw materials exported to it by the supplier will be further restricted by the US export control regulations, and the supplier must apply for an export license in advance before continuing to supply to the company u3002

According to the Nikkei Asia review, although SMIC has not been formally included in the so-called entity list like Huawei, export controls will still hinder SMIC from acquiring US technology, which is a strong signal that the United States is strengthening its examination of the chip manufacturer.

Analysts said SMIC could still rely on the existing equipment and materials to maintain the operation of the production line without the problem of chain breaking. Generally speaking, the software on some devices can be used continuously as long as it is not restarted or the software is updated actively.

SMIC has been investing heavily in advanced chip manufacturing technology, hoping to narrow the technological gap with market leaders such as TSMC and Intel. At the same time, the company is also trying to reduce its dependence on American suppliers. Its goal is to build a 40nm production line without us equipment by the end of this year, and plans to build a more advanced 28nm production line within three years.

While short-term supply disruptions are inevitable, we expect a final settlement, at least partially lifting the restrictions. Mark Li, Senior Semiconductor analyst at Bernstein, believes that once the US export restrictions are implemented, SMICs existing and future manufacturing capacity will be damaged.

In fact, the export control of the United States will inevitably damage the interests of American enterprises.

Taiwan media reported a few days ago that once SMIC is sanctioned by the United States, mobile phone power management chips will bear the brunt of a large shortage. Among them, Qualcomm, which has launched a large part of power management IC (PMIC) in SMIC, will suffer greatly. The latter has been asking for production capacity from various wafer fabs everywhere.

For the power management IC of the latest generation 5g mobile phones, the annual demand for power management IC is about 1.5 million pieces of 8-inch wafers, and the orders are supplied by TSMC and SMIC international. TSMC gets about 900000 pieces of orders a year, accounting for about 60%, and SMIC international gets about 600000 pieces of orders, accounting for about 40%.

Whats embarrassing is that although Qualcomm immediately sought price increases from all the worlds foundries to obtain 8-inch foundry capacity, the semiconductor industry is currently short of 8-inch wafer capacity, and none of them can provide 600000 pieces of capacity to replace SMICs position.

In response to the U.S. Department of Commerces requirement that US chip companies must apply for permission before supplying to SMIC, Chinese Foreign Ministry spokesman Wang Wenbin said on September 28: as a principle, China firmly opposes the US governments generalization of the concept of national security, violating the principles of market economy and fair competition, violating international economic and trade rules, abusing export control and other restrictive measures, and unreasonably suppressing Chinese enterprises, Destroy the normal international economic and trade order. China will continue to take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises. This article is the exclusive manuscript of the observer website. It is not allowed to reprint without authorization. Source: observer.com editor in charge: Zhong Qiming_ NF5619

As a principle, China firmly opposes the generalization of the concept of national security by the United States government, violates the principles of market economy and fair competition, violates international economic and trade rules, abuses export control and other restrictive measures, which unreasonably depresses Chinese enterprises and destroys normal international economic and trade order. China will continue to take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.

This article is the exclusive manuscript of the observer website. It is not allowed to reprint without authorization.