US figured out how to crush China’s chip industry in one blow

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Эльяс Касми

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Washington wants to ban the Dutch company ASML from supplying lithography equipment to China. For ASML, the world’s largest vendor of such installations, China accounts for 16% of sales. The US wants to prevent China from developing its own chip production. The whole world could suffer from the actions of the Americans, since the factories of Samsung, SK Hynix and other major chip manufacturers are located in China.

Holland is the new US weapon in the trade war

The US authorities have found a new lever of pressure on China in terms of modern technology. They became the Dutch company ASML Holding NV – the largest vendor in the Netherlands and in the world of lithographic equipment used in the production of microcircuits.

According to Bloomberg, the Americans are going to ban ASML supply any equipment for the production of microcircuits to China. The first steps in this direction have already been taken – despite all its power and the fact that ASML is not directly subordinate to the US authorities, it has already refused to supply China with state-of-the-art equipment for EUV lithography used to produce semiconductors according to the most current standards on the most modern technological processes. . The company is unable to obtain the Dutch government export license required for this.

Apparently, the Americans are not going to be satisfied with this and stop pressure on the PRC through “agreements” with the Dutch giant. The US plans now include a ban on export DUV-installations – “hardware” used in production lines for the production of chips according to older technical processes.

What did the Americans do

DUV installations are a whole generation behind the advanced ones (EUV). However, DUV lithography is still the most common method for manufacturing a number of microcircuits required for automobiles, phonescomputers and even robots.

US wants to deprive China of its semiconductor production

The idea of ​​the US authorities will hit primarily the largest Chinese manufacturers of microelectronics. These are Semiconductor Manufacturing International Corp. (minimum wage) and Hua Hong Semiconductor Ltd. Other contract chip vendors based in China will also be affected.

The goal of the Americans is simple – Washington wants to curb the plan Beijing sector development microelectronics and slow down the development of China in this direction. The only question is whether the US will be able to find a compromise with ASML.

Difficult task

By the time the material was published, it was not known exactly what arguments the American side was advancing during the negotiations. For ASLM, breaking contracts with Chinese clients is most unprofitable.

According to Bloombergshipment of equipment to China, even taking into account the restrictions on the supply of EUV units, brings ASML a significant portion of the proceeds. China is the third largest market marketing products for the company Taiwan and South Koreawhere to buy it TSMC, SK Hynix and Samsung. According to the results of 2021 alone, its activities in the Chinese market brought it about 2.1 billion eurowhich roughly corresponds to 16% of total sales.

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Safety

The fact that the US wants to limit the business of ASML was not slow to affect its financial stability even before the introduction of bans. Against the background of information about possible “complicity” American to the authorities, its shares collapsed by 7.2% in just one day, writes Reuters. Along the way, the decline also affected other manufacturers of equipment for lithography – Lam Research (-3.6%) and Applied Materials (-2,4%).

Possible alternative for China

ASML is the world’s leading manufacturer of lithographic systems, machines that perform a critical step in the semiconductor fabrication process. ASML’s dominance in the market for this type of equipment means that further cutting off China’s access to its products will undermine the Asian nation’s drive to become more self-sufficient in critical electronic components.

If the US still manages to implement its plan and deprive ASML of an impressive part of the proceeds, China may have serious, but still solvable problems with the supply of DUV units. The Dutch company – although the largest, but not the only one provider such equipment.

It comes to China not only from the Netherlands, but also from Japan – in this country it is produced by companies Canon and Nikon, in Russia better known as vendors photographic equipment. As writes Tom’s Hardware, these companies can provide the PRC with the necessary equipment, but are unable to supply the required volumes, which threatens with a shortage. In addition, the United States is negotiating with them, writes Bloomberg. The companies have yet to confirm this.

Sad consequences for the whole world

US action to disrupt China’s semiconductor manufacturing industry could end up hurting many industries and consumers. If the Americans get their way in negotiations with ASML, then supplies Dutch equipment will stop not only at factories Chinese companies.

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On the territory of the PRC there are factories of foreign manufacturers of chips, in particular, Samsung, SK Hynix and YMTC. If they stop receiving the necessary installations, what they have may begin to fail without the possibility of replacement. This could lead to a new chip shortage. For example, at the beginning of 2021, due to problems with the electricity supply, only a few days were stopped american Samsung factories. However, this was enough to cause a disruption in the global supply of chips.

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