US wants China's chip industry 5 generations behind cutting edge, head of equipment maker AMEC says at Wuxi conference

[Daniel Nenni]

The head of one of China's leading semiconductor equipment makers believes Washington's escalating export and investment restrictions betray the real goal of the US: keep China's chip-making technology at least five generations behind the cutting edge.

Advanced Micro-Fabrication Equipment Inc China (AMEC) chairman and CEO Gerald Yin Zhiyao made the comments on Thursday at the China Semiconductor Equipment Annual Conference in Wuxi, a city near Shanghai in eastern China. He referred to the US export restrictions imposed last October, which came ahead of another escalation this week when the Biden administration unveiled plans to restrict investment into China in sensitive areas including semiconductors.

"The October rules really exposed the US' true intention, which aims to fix China's chip-making on 28-nanometre, at least five generations behind the global leading edge of 3-nm to 14-nm," Yin said during his talk at the conference. "We can't accept [this]," he added.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

Advanced Micro-Fabrication Equipment Inc China (AMEC) chairman and CEO Gerald Yin Zhiyao speaks at the China Semiconductor Equipment Annual Conference in Wuxi on August 10, 2023. Photo: qq.com alt=Advanced Micro-Fabrication Equipment Inc China (AMEC) chairman and CEO Gerald Yin Zhiyao speaks at the China Semiconductor Equipment Annual Conference in Wuxi on August 10, 2023. Photo: qq.com>

Yin described the updated US tech export controls targeting all China-based foundries as the most "lethal" ban since the US started rolling out related sanctions on China's hi-tech firms in 2019. Yin called the latest executive order - which targets US investment into China's semiconductor, artificial intelligence and quantum computing industries - as Washington's "16th move" against the country since then.

The rules imposed last October aim to cap China's logic chip-making capabilities at the 14-nm level, DRAM chips at 18-nm and 3D NAND memory at 128 layers. The US cited national security risks and the potential military applications of advanced chips.

Yin, a 20-year veteran of the US chip equipment industry including time at Applied Materials, said locally-procured semiconductor equipment in China's foundries accounted for just 15 per cent of the total. The other 85 per cent of machines come from the US, Netherlands and Japan, he said.

"That's why the US needed Japan and Netherlands on board to curb our development," he told a room packed with semiconductor professionals and investors.

Chinese semiconductor equipment firms still lag global peers in both market share and technological sophistication, according to industry professionals attending the conference. China's tool makers have virtually no global presence in some segments such as lithography. Catching up in these areas is an uphill battle for Chinese firms in a worsening geopolitical environment that is squeezing out foreign money and technological cooperation.

Li Jinxiang, deputy secretary general of China Electronic Production Equipment Industry, said some China-made equipment fails to meet the efficiency needs of foundries.

"It's a huge waste that a 1 billion yuan [US$138.7 million] ASML-made lithography machine has to wait for a domestically-made wafer coating and developing machine to catch up in speed," Li said, referring to the Dutch chip equipment firm that has a virtual monopoly on the most advanced lithography machines.

An ASML lithography machine is capable of processing 350 12-inch wafers per hour, Li explained, while China-made wafer coating and developing machines cannot match that output.

A wafer coating and developing machine is crucial in assisting the lithography process. It applies the light-sensitive photoresist material to the wafer, which is then put into lithography systems for exposure. The machine then takes the exposed wafer to develop the pattern.

However, Yin said he has confidence that China can develop a globally competitive equipment industry within years, as many US-trained Chinese experts have returned home. Using chip-making equipment to curb China's progress will yield no good results, he said.

Yin also called AMEC's brief inclusion in 2021 on a US defence department list of companies allegedly supporting the Chinese military "sheer nonsense". It was the first time Yin publicly commented on the US sanctions against AMEC.

He said the US "reluctantly" removed AMEC from the list after "four months of intense negations".

US wants China's chip industry 5 generations behind cutting edge, head of equipment maker AMEC says at Wuxi conference

The head of one of China's leading semiconductor equipment makers believes Washington's escalating export and investment restrictions betray the real goal of the US: keep China's chip-making technology at least five generations behind the cutting edge. Advanced Micro-Fabrication Equipment Inc...

www.yahoo.com

 

[hist78]

I believe more restrictions and sanctions targeting PRC's tech industry will come.

Tech investors face 'new era' of China restrictions after Biden order limits funding in A.I., chips

Following President Biden's executive order to limit tech investments in China, venture capitalists will have even less exposure to the world's No. 2 economy.

www.cnbc.com

 

[Hunterdolphin]

Even though they were not done in the identical manner to the USA current actions against China, the parallel premise of maintaining, or achieving technological dominance though the use of mercantilist trade measures have been previously undertaken by China using Forced transfer agreements, joint venture requirements, targeted acquisitions, cyber enabled theft of IP, and confidential business records, local purchase and investment requirements, and the targeted recruitment of foreign scientist who worked in specific industries.

His comments do indicate that these measures to reduce Chinas technology dominance within the semiconductor sector are effective. Whether, or not you believe China is eventually able to fully replace foreign equipment is debatable. I still find it unlikely China will be able to catch up to a coalition of nations from Europe, America, and Asian who have had a fifty year head start in semiconductor equipment manufacturing.

 

[Jert]

I believe more restrictions and sanctions targeting PRC's tech industry will come.

Tech investors face 'new era' of China restrictions after Biden order limits funding in A.I., chips

Following President Biden's executive order to limit tech investments in China, venture capitalists will have even less exposure to the world's No. 2 economy.

www.cnbc.com

I really hope so. More actions are needed, absolutely.
Do not want to see any of our children of the free world to have to live under the global communist dictatorship world that CCP is aggressively pushing for. They are touting "free trade" simply to buy time so they can get ready.

 

[delong.height]

His comments do indicate that these measures to reduce Chinas technology dominance within the semiconductor sector are effective. Whether, or not you believe China is eventually able to fully replace foreign equipment is debatable. I still find it unlikely China will be able to catch up to a coalition of nations from Europe, America, and Asian who have had a fifty year head start in semiconductor equipment manufacturing.

You know it's hard to guess what the national policy is going to be like. But I definitely think that there will be collision and it's going to be very badly for Apple, AMD, Intel, Qualcomm, Nvidia, TSMC for example.

If I am policy maker in China, I would either require all of those companies to either collaborate with Chinese foundry or stop selling their processors or devices to China. The main problem for Chinese is leading edge capacity is getting crushed by US policy. There is literally no capability to produce anything leading edge. And that's a big risk factor for China from national security or economic point of view. Because less profits on the leading edge, it will mean it have to make up in quantity it sells to the rest of the world on mature nodes, or it will have to stimulate and spend huge amount of money to encourage R&D interests in China.

All of this leading edge that are imported by Chinese will further reduce its ability to innovate or catch up to the rest of the world. So, the profits that's required for R&D and capex are getting squeezed as US sells more devices/servers to China, further weaking Chinese economy. And the difference will be bigger as time passes.

They are going to do some action, and it's going to be bloody when it happens.

 

[delong.height]

You know it's hard to guess what the national policy is going to be like. But I definitely think that there will be collision and it's going to be very badly for Apple, AMD, Intel, Qualcomm, Nvidia, TSMC for example.

If I am policy maker in China, I would either require all of those companies to either collaborate with Chinese foundry or stop selling their processors or devices to China. The main problem for Chinese is leading edge capacity is getting crushed by US policy. There is literally no capability to produce anything leading edge. And that's a big risk factor for China from national security or economic point of view. Because less profits on the leading edge, it will mean it have to make up in quantity it sells to the rest of the world on mature nodes, or it will have to stimulate and spend huge amount of money to encourage R&D interests in China.

All of this leading edge that are imported by Chinese will further reduce its ability to innovate or catch up to the rest of the world. So, the profits that's required for R&D and capex are getting squeezed as US sells more devices/servers to China, further weaking Chinese economy. And the difference will be bigger as time passes.

They are going to do some action, and it's going to be bloody when it happens.

It will affect US chip designer for sure, but their top line(revenue) is saved, at least for now.

 

[blueone]

"It's a huge waste that a 1 billion yuan [US$138.7 million] ASML-made lithography machine has to wait for a domestically-made wafer coating and developing machine to catch up in speed," Li said, referring to the Dutch chip equipment firm that has a virtual monopoly on the most advanced lithography machines.

An ASML lithography machine is capable of processing 350 12-inch wafers per hour, Li explained, while China-made wafer coating and developing machines cannot match that output.

I must be missing a key concept here... why not just use two Chinese wafer coating and developing machines for every ASML machine?

 

[tonyget]

No. Keep China certain generations behind was the old policy. The new policy, according to US officials，is to have a lead as big as possible

 

[tonyget]

China using Forced transfer agreements, joint venture requirements, targeted acquisitions, cyber enabled theft of IP, and confidential business records, local purchase and investment requirements, and the targeted recruitment of foreign scientist who worked in specific industries.

You know it's really funny that the West always portray JV as the biggest source of Chinese tech development，when in reality，JV is the biggest scam in China's tech development. No successful Chinese tech companies/industries ever emerge from JV, or can you name any？

The only thing JV did to China，is sell products under the disguise of "domestic" tag ，cheating those Chinese buyers/gov who want to support domestic products，but in reality it's just repacking foreign products. The automobile industry in China is the prime example of this，in ICE era Chinese car market was dominated by JV，domestic car development was stagnant，no one wants to buy indigenous Chinese cars，not even in China. Chinese ICE cars suck because the Germans/Japanese never transfer any core technology to their Chinese JV parter in 30 years，nor do the Chinese manufactures in JV care about it，they are happy to just sell repackaged foreign cars，which is deemed "domestic" in China. Now Chinese gov realize the problem，so they allowed Tesla to entered Chinese market as a wholly foreign company，dropped the JV requirement. And the result is obvious，Chinese EV industry is flourishing，domestic EV manufactures are taking the lead，China has officially surpassed Japan to become the largest car exporter in the world.

No multinational corporation ever transfer any core technology to Chinese JV partners in 30 years，or can you name any？Western companies are not as stupid as you might have thought

His comments do indicate that these measures to reduce Chinas technology dominance within the semiconductor sector are effective. Whether, or not you believe China is eventually able to fully replace foreign equipment is debatable. I still find it unlikely China will be able to catch up to a coalition of nations from Europe, America, and Asian who have had a fifty year head start in semiconductor equipment manufacturing.

This is what he said，

However, Yin said he has confidence that China can develop a globally competitive equipment industry within years, as many US-trained Chinese experts have returned home. Using chip-making equipment to curb China's progress will yield no good results, he said.

His comments indicates that he is not worried about the long term prosperity of Chinese equipment development. You may not share his opinion，but let's remember the UK had more than fifty year head start in industrial revolution than Germany/US，Germany/US had more than fifty year head start than Japan. So what's the situation now？Is Japan fifty year behind the Germany/US, and Germany/US fifty year behind UK？

 

[Jozo035]

You know it's really funny that the West always portray JV as the biggest source of Chinese tech development，when in reality，JV is the biggest scam in China's tech development. No successful Chinese tech companies/industries ever emerge from JV, or can you name any？

The only thing JV did to China，is sell products under the disguise of "domestic" tag ，cheating those Chinese buyers/gov who want to support domestic products，but in reality it's just repacking foreign products. The automobile industry in China is the prime example of this，in ICE era Chinese car market was dominated by JV，domestic car development was stagnant，no one wants to buy indigenous Chinese cars，not even in China. Chinese ICE cars suck because the Germans/Japanese never transfer any core technology to their Chinese JV parter in 30 years，nor do the Chinese manufactures in JV care about it，they are happy to just sell repackaged foreign cars，which is deemed "domestic" in China. Now Chinese gov realize the problem，so they allowed Tesla to entered Chinese market as a wholly foreign company，dropped the JV requirement. And the result is obvious，Chinese EV industry is flourishing，domestic EV manufactures are taking the lead，China has officially surpassed Japan to become the largest car exporter in the world.

No multinational corporation ever transfer any core technology to Chinese JV partners in 30 years，or can you name any？Western companies are not as stupid as you might have thought



This is what he said，


His comments indicates that he is not worried about the long term prosperity of Chinese equipment development. You may not share his opinion，but let's remember the UK had more than fifty year head start in industrial revolution than Germany/US，Germany/US had more than fifty year head start than Japan. So what's the situation now？Is Japan fifty year behind the Germany/US, and Germany/US fifty year behind UK？

It is not that transparent and companies have other partners or even involved company itself can be founded purely for reason to participate on behalf of other companies...

But as a example: VIA did JV with Zhaoxin (IIRC Zhaoxin was created for this purpose), then there was some JV from AMD but this is bit unclear.... And now they have ZEN/ZEN2 level CPU. So I would call it success.

...from wiki: "Zhaoxin (Shanghai Zhaoxin Semiconductor Co., Ltd.; /ˈʒaʊʃɪn/, Chinese: 兆芯; pinyin: Zhàoxīn [ʈʂâu ɕín]) is a fabless semiconductor company, created in 2013 as a joint venture between VIA Technologies and the Shanghai Municipal Government."

So there is high probability that acquired IP is shared across multiple companies. So even if company directly involved in JV goes bankrupt without releasing any new product, chinese government can take this IP and make it available for others.

 

[Jozo035]

There is difference between technology view and political view.

Why Huawei was banned? IP theft? Spying? These are serious issues but we still do have rule of law and things like these are extremally difficult to prove and justify actions... Specially whey You have much more reliable "tool" like secondary sanctions where all the work is already done and you just need to show data. Huawei decided to supply Iran. Thats all.

Situation now is similar:
West made decision is Ruso-Ukranian conflict. Although We are not fighting, but we are making things for Russia more difficult. By sanctions.
China made decision to evade these sanctions.

I think that everyone here has valid point, but in the end, it will be again decided by politics.

Btw.: china expressed these ambitions some 30 years ago. They had even periods of bigger buildups than they have now. Why are we acting now?

 

[tonyget]

Btw.: china expressed these ambitions some 30 years ago. They had even periods of bigger buildups than they have now. Why are we acting now?

Putin expressed that he will not tolerate Ukraine to be under Western influence，on a public speech 10 years ago，why no one take his word seriously and shocked by his action now？

 

[cliff]

Western companies are not as stupid as you might have thought

Yes we are.

 

[Fred Chen]

Back in 2021, China's CXMT published a 4F2 DRAM cell with a minimum pitch of 41 nm.

High density V-GAA transistor structure array based on self-aligned double patterning

In this work, the pillar structure of V-GAA transistor has been developed for sub 10 nm technology node application in DRAM. SADP method with 193 nm wavelength was used to define the pitch of 41 nm along the word line direction and that of 47.3 nm along the bit line direction. The pillar...

ieeexplore.ieee.org

Looks like work that was just starting, I wonder if they had any progress. Since they had the equipment before the sanctions, I also wonder how they are faring now.

 

[benb]

Rather than talk about boring politics: Consider Anji Microelectronics LTD, Shanghai, a Chinese CMP slurry and materials vendor to the semiconductor industry. It's a global player, growing steadily since 2004. Shumin Wang is the boss (yay Shumin!), who worked at Cabot Microelectronics (now part of Entegris) while I was there. And was one of the good ones who saw what was happening post-Matthew Neville and got out. Matthew was founder-like (although not truly a founder, it was part of Cabot Corp) at Cabot Micro.

Her story is similar to Morris Chang, in some small ways; success in the US leading to a return to Asia and having a major impact.

China is doing many things right. Right enough for people like Shumin to return there, do well, build a team. The US should be worried! But shouldn't take shortcuts! Sanctions don't work, and divert attention from investment deficits (Anji staff is 45% R&D: https://www.anjimicro.com/en/hexinnengli.html#advanced

There are probably many more Anjis in China, while, in the US, we have more and more consolidation. As Cabot Microelectronics being swallowed Entegris somewhat illustrates. The USA has a serious monopoly problem. China has a "USA political flavor of the month is tough on China" problem, which who knows, it could be serious too, but seems likely to be easier to overcome, and maybe isn't really a problem.

 

[Barnsley]

https://www.digitimes.com/news/a202.../amec-ic-manufacturing-us-china-chip-war.html

Sounds like the Chinese companies are eating each others lunch!!

Not very co-operative for the greater glory and all that!

 

[Jozo035]

That is very dangerous thin to say. Basically criticizing "thousand talents program" and gov approach...

 

[benb]

Good digitimes article.

This sweet ironic paragraph

"Yin openly discussed the severe internal competition within the domestic equipment sector, resulting in harmful competition obstructing industry development. This includes illegally obtaining competitors' trade secrets and copying their products. Companies are involved in both chip manufacturing and equipment development, leading to counterfeiting of suppliers' equipment."

The irony being that it was fine to rip off US or Japanese vendors but ripping off their own, shocking.

 

[jimienarosn]

Good digitimes article.

This sweet ironic paragraph

"Yin openly discussed the severe internal competition within the domestic equipment sector, resulting in harmful competition obstructing industry development. This includes illegally obtaining competitors' trade secrets and copying their products. Companies are involved in both chip manufacturing and equipment development, leading to counterfeiting of suppliers' equipment."

The irony being that it was fine to rip off US or Japanese vendors but ripping off their own, shocking.

Totally agree with you!

 

[freshshine1]

Yin stated that the US attempts to hinder China using equipment are not only irrational but also unlikely to yield positive results. Due to the impact of US restrictions, many leading figures in these fields have returned to China. Given time, China still has the capability to develop internationally competitive products.

Can anyone share some insight on this point he made? Is it as simple as
1. The students he mentioned studying abroad do not have enough technical depth when they return to China to make a technical significance? Theres no doubt these are bright young minds but how much will it make a difference
2. Those who do have the technical expertise, what are their stands? I assume a lot of them have spent the past 20-30 years overseas will they consider leaving their current position to help China develop while handicapped by the US in technologies?
3. Assuming China develops the tools to catch up, I think some other thread mentioned, by then is it only a question of how far the US and allies can be ahead of China in developments?