The containment measures of the United States may make it difficult for China to obtain semiconductor equipment, resulting in a sharp reduction in related investment.
(AFP file photo)
[Compilation of Wei Guojin/Taipei Report] Korean media "Korea IT News" reported that the United States has stepped up its siege of China's semiconductor technology, making it difficult for Chinese semiconductor manufacturers to obtain core equipment, leading to a significant reduction in equipment investment.
Some analysts speculate that the equipment investment of SMIC, China's largest semiconductor foundry, and memory manufacturers Yangtze Memory and Changxin Memory may plummet by more than 60% this year, and the situation may be even more severe in the future.
According to the report, the U.S.'s semiconductor technology export controls on China and the sluggish economy in China have caused a sharp drop in equipment investment in China's semiconductor industry, and South Korea's semiconductor equipment exports to China have fallen sharply. In addition, Korean semiconductor companies have also reduced investment. The industry is facing a "Complex Crisis".
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According to data from the Korean Customs Service, the total amount of South Korean semiconductor equipment exports to China in 2022 will be approximately US$1.37 billion, a sharp drop of 40% from US$2.258 billion in 2021.
After the export scale was halved in the first half of last year, it failed to rebound in the second half of the year and continued to decline.
According to the report, China will actively purchase semiconductor equipment in 2021, almost to the extent of "stockpiling".
However, even excluding the exceptional prosperity in 2021, South Korea's exports of semiconductor equipment to China last year were lower than the US$1.4 billion between 2019 and 2020, showing the grim situation.
The decline in South Korea’s exports to China last year was mainly due to the impact of the anti-epidemic measures. At the end of last year, China loosened the measures, so that the export situation is expected to improve.
However, the U.S. tightened control measures, making South Korea's export of semiconductor equipment to China encounter obstacles again.
The U.S. Commerce Department effectively banned U.S. companies from exporting equipment to Chinese semiconductor makers last October.
Things got worse in January, when the Netherlands and Japan agreed to follow suit with restrictions on exports to China.
A South Korean industry source said, “China has been using many South Korean equipment as a substitute for American or Japanese equipment. However, when export regulations were strengthened, the situation changed. If the core process equipment cannot be obtained, it is impossible to operate a semiconductor factory, so The demand for Korean second-hand equipment is bound to fall."
According to the report, this can explain the difficulty in obtaining equipment from the United States, Japan, and the Netherlands, which led to the reduction of investment in equipment by Chinese semiconductor factories, and the export of Korean equipment was also affected, resulting in a vicious circle.
China's most important semiconductor foundry, SMIC, and major memory manufacturers Yangtze Memory and Changxin Memory have announced an increase in equipment investment this year, but the actual investment is expected to be significantly reduced because it is difficult to obtain core equipment.
Market research firm TredForce predicts that investment in related equipment will drop by more than 60%.
The Chinese plants of Samsung Electronics and SK Hynix are mainly supplied by Korean manufacturers. It is expected that after the one-year grace period of the US export control, the demand in China will further decline.
According to the report, South Korea's semiconductor equipment factories are caught in the "double torture" of export and domestic demand deterioration.
South Korean semiconductor manufacturers have begun to reduce equipment investment, and some orders have been withdrawn. If the United States pressures South Korea to join the ranks of export controls to China, the situation will worsen.
Lee Chang-han, vice president of the Korea Semiconductor Industry Association, said, "Domestic equipment manufacturers mainly supply Samsung Electronics and SK Hynix's Chinese factories, so they will be deeply impacted by US regulations and the actions of these manufacturers in the future."
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