Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip maker, was confirmed to be under export control by U.S. authorities. According to a report released by market research firm Globus Technologies, the impact of the U.S. supply disruption on SMIC is likely to be greater than that of Fujian Jinhua and Huawei; without the support of international equipment, SMIC’s development and evolution of advanced processes will be hindered, and the development of China’s semiconductor industry will be impacted as well. According to previous reports, SMIC and for some time now, in preparation for sanctions, have been purchasing large quantities of U.S. core materials.
According to the Central News Agency today, SMIC, China’s largest chipmaker, was confirmed to be under export control by the U.S. authorities, and SMIC’s shares fell in Hong Kong on May 5. Securities dealers and analysts here are generally negative on SMIC’s sanctions, saying they will weaken SMIC’s earnings.
Asdaq.com said today that Credit Suisse lowered its price target on SMIC to 17 yuan in a research report.
Reuters cited a report by TrendForce, a market research firm, that the impact of a U.S. supply cut on SMIC is greater than that of Fujian Jinhua and Huawei; without the support of international equipment, the development and evolution of SMIC’s advanced processes will be hindered and the development of China’s entire semiconductor industry will suffer.
According to TrendForce, Taiwan’s 65% market share of the foundry market is still the largest, followed by South Korea’s 16% and China’s 6%. SMIC is the fifth largest foundry in the world, with a market share of about 4%, and the first in China. It is also the only Chinese foundry with a clear blueprint for advanced process development below 14nm. As a leader in China’s semiconductor manufacturing process, SMIC is facing a crisis of upstream equipment and raw materials outages, which will have a serious impact on its advanced process development and the path to Chinese semiconductor equipment manufacturing.
According to SMIC’s announcement, the U.S. Department of Commerce sanctions will require suppliers to apply for export licenses before they can continue to supply SMIC with U.S. equipment, parts and raw materials.
According to TrendForce, the impact of U.S. sanctions on SMIC’s supply will be greater than that of Fujian Jinhua and Huawei. In recent years, Chinese equipment manufacturers have been quick to step up their training by cooperating with domestic wafer fabs, but compared to the chip production process technology, which has gradually narrowed the distance with international manufacturers, the pace of development of Chinese equipment manufacturers is still lagging behind international manufacturers. Therefore, if SMIC loses the support of international equipment in the future, the development and evolution of advanced processes will be hindered, and the development of the entire Chinese semiconductor industry will also be impacted.
According to Reuters, the U.S. semiconductor equipment suppliers that have the most direct supply relationship with SMIC, including Applied Materials AMAT. ASML.AS is also within the scope of restriction because its parts mainly originate from the U.S. In contrast, silicon wafers and semiconductor chemical raw materials are mainly supplied by Japanese and European suppliers, and the impact is initially judged to be small.
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