Evaluating US Sanctions, China is Pushing for Semiconductor Sovereignty
Amid US sanctions over the last couple of years, China has been striving to gain technological sovereignty in semiconductor component production, starting with their primary industries. Despite US allies making attempts to tighten sanctions, they have not synchronized their response effectively, giving Japanese equipment suppliers a golden opportunity to turn a healthy profit in the Chinese market.
Chinese Manufacturers Relying on Mature Technologies
As the sanctions from the US and its political allies primarily target advanced lithographic technologies, Chinese chip manufacturers have been procuring equipment from Japan to produce components using more mature technologies, such as 28 to 45 nm range. These chips have wide-ranging applications, which justifies the purchase of the necessary equipment.
Japan Pockets Profits from Chinese Market
The management of Japanese company Screen Semiconductor Solutions admitted in an interview with Nikkei Asian Review that their revenue from the Chinese market would grow from 19% to 44% this fiscal year. Similarly, Tokyo Electron reported deriving 46.9% of its total revenue from China in the last quarter, a trend mirrored by many Japanese suppliers of chip manufacturing equipment.
Nikon Releases New Equipment Models Amid Sanctions
In the wake of the sanctions, Nikon considered it prudent to introduce new equipment models under its i-line series for the first time in 25 years, as these models are in demand in China. Such a move helps the company comply with the export control requirements of Japanese and American authorities while capitalizing on the growing Chinese market.
Sanctions Result in More Business for Local Manufacturers
Another Japanese lithographic equipment manufacturer with a presence in China explained that the sanctions against China have even brought new business from local clients. Having a local plant reassures Chinese buyers amid escalating sanctions.
According to some Japanese suppliers, Chinese clients are attempting to manufacture more advanced components using available equipment to circumvent restrictions. Nonetheless, not all equipment suppliers believe in the unlimited potential of the Chinese market. Representatives of Ebara, a manufacturer of industrial and precision machinery, express concerns about unpredictable demands for their equipment. They point out that many Chinese companies with ambitious plans to build factories may suddenly go bankrupt, which is hardly a source of optimism for equipment suppliers.
