US Sanctions Helped China Supercharge Its Chipmaking Industry

[onebyone]

(Bloomberg) -- China’s chip industry is growing faster than anywhere else in the world, after US sanctions on local champions from Huawei Technologies Co. to Hikvision spurred appetite for home-grown components.
Nineteen of the world’s 20 fastest-growing chip industry firms over the past four quarters, on average, hail from the world’s No. 2 economy, according to data compiled by Bloomberg. That compared with just 8 at the same point last year. Those China-based suppliers of design software, processors and gear vital to chipmaking are expanding revenue at several times the likes of global leaders Taiwan Semiconductor Manufacturing Co. or ASML Holding NV.

That supercharged growth underscores how tensions between Washington and Beijing are transforming the global $550 billion semiconductor industry -- a sector that plays an outsized role in everything from defense to the advent of future technologies like AI and autonomous cars. In 2020, the US began restricting sales of American
technology to companies like Semiconductor Manufacturing International Corp. and Hangzhou Hikvision Digital Technology Co., successfully containing their growth -- but also fueling a boom in Chinese chip-making and supply.

While shares in the likes of Cambricon Technologies Corp. have more than doubled from lows this year, analysts say there may still be room to grow. Beijing is expected to orchestrate billions of dollars of investment in the sector under ambitious programs such as its “Little Giants” blueprint to endorse and bankroll national tech champions, and encourage “buy China” tactics to sidestep US sanctions. The rise of indigenous names has caught the attention of some of the pickiest clients: Apple Inc. was said to consider Yangtze Memory Technologies Co. as its latest supplier of iPhone flash memory.

“The biggest underlying trend is China’s quest for self-sufficiency in the supply chain, catalyzed by Covid-related lockdowns,” Morningstar analyst Phelix Lee wrote in an email responding to inquiries from Bloomberg News. “Amid lockdowns, Chinese customers who mostly use imported semiconductors need to source homegrown alternatives to ensure smooth operations.”

Read more: China’s ‘Little Giants’ Are Latest Weapon in Tech War With U.S.

At the heart of Beijing’s ambitions is the impetus to wean itself off a geopolitical rival and more than $430 billion worth of imported chipsets in 2021. Orders for chip-manufacturing equipment from overseas suppliers rose 58% last year as local plants expanded capacity, data provided by industry body Semi show.

That in turn is driving local business. Total sales from Chinese-based chipmakers and designers jumped 18% in 2021 to a record of more than 1 trillion yuan ($150 billion), according to the China Semiconductor Industry Association.

A persistent chip shortage that’s curtailing output at the world’s largest makers of cars and consumer electronics is also working in local chipmakers’ favor, helping Chinese suppliers more easily access the international market -- sometimes with premiums tacked onto the best-selling products, such as auto and PC chips.

SMIC and Hua Hong Semiconductor Ltd., the biggest contract chip makers, have kept their Shanghai-based plants operating at almost full capacity even as the worst Covid-19 outbreak since 2020 paralyzes factories and logistics across China. With local authorities’ help, cargo flights from Japan delivered essential materials and gear to chip plants as the city went under lockdown. SMIC recently reported a 67% surge in quarterly sales, outpacing far larger rivals GlobalFoundries Inc. and TSMC.

Read more: China’s Chipmaking Power Grows Despite US Effort to Counter It

Shanghai Fullhan Microelectronics Co.’s revenue grew 37% on average because of high demand for surveillance products. The video chip designer has pledged to expand into electric vehicles and AI after winning its “Little Giant” designation. And design tool developer Primarius Technologies Co. doubled sales on average over the past four quarters, saying it’s developed software that can be used in making 3-nanometer chips

Putting aside long-term profitability concerns, Morningstar’s Lee said the aggressive capacity build-up from Chinese players will elevate their presence globally.

“There’s little doubt Chinese chipmakers can achieve revenue growth over the next few years from cars, consumer electronics and other devices,” he said.

US Sanctions Helped China Supercharge Its Chipmaking Industry

(Bloomberg) -- China’s chip industry is growing faster than anywhere else in the world, after US sanctions on local champions from Huawei Technologies Co. to Hikvision spurred appetite for home-grown components.Most Read from BloombergUS Futures Gain With European Stocks; Dollar Slips: Markets...

finance.yahoo.com

 

[Beast]

Thank you Trump and Biden.
Another example of how to destroy US faster

 

[tower9]

The rise of China is inevitable.

The more the West tries to hurt China in order to contain it, the more the West will hurt itself and destroy it's own future. It is like trying to stop an unremitting flood.

The West needs to just accept that China has become powerful and learn to live with it, just like China has learned to live with a powerful West for two centuries.

 

[Dalit]

China is proceeding at lightning speed. I have never ever seen the Americans and the Western world behave as erratically as they have in the past 5 to 6 years. So much anger. So much desperation. So much blame game. So much propaganda. China just ignores this and continues to develop at lightning speed.

 

[Mugen]

That's how it works when you don't consider yourself a slave, you don't bow down and do their bidding, you compete against them.

 

[StraightEdge]

Interesting, and also so few comments on such a major development.

 

[Yongpeng Sun-Tastaufen]

Western sanction resulted in J-20. If West didn't put sanction on China, China would have bought Western planes instead of making J-20.

 

[beijingwalker]

To achieve “technological self-reliance”, China IPO fundraising doubles US total to top global ranks

June. 20 2022

New listings in China this year have raked in more than double the amount raised on Wall Street, after officials camped out at Shanghai’s stock exchange during the city’s strict lockdown to ensure a steady flow of deals. Total fundraising from initial public offerings in China has hit almost $35bn this year, compared with just $16bn on Wall Street, according to data from Dealogic.

The strong showing for China’s IPO market came as authorities in Shanghai reacted swiftly after the city of 26mn entered a two-month lockdown, dispatching a squad of cadres to safeguard what is one of the most precious resources in China’s financial capital.

As residents flooded social media with complaints about life under house arrest, China’s securities regulator sent officials to camp out at Shanghai’s stock exchange for the duration — by day, grilling listings applicants via videoconference before signing off on share sales, and by night sleeping on cots and inflatable mattresses, according to people familiar with the matter. The Shanghai Stock Exchange did not immediately respond to a request for comment.

China’s equity fundraising haul, up 7 per cent from a year ago, puts the country at the top of global rankings and stands in stark contrast to the rest of the world, where IPO proceeds have fallen 80 per cent as the war in Ukraine, surging inflation and central bank rate rises have rattled markets and delayed companies’ plans to go public.

Bankers said the rush of Chinese listings was driven in part by Beijing’s desire to achieve “technological self-reliance”, with a special focus on sectors considered vital to economic growth and competition with the west including renewables, semiconductors and other high-end manufacturing.

One equity capital markets banker based in Shanghai said policymakers’ push for share offers by companies in “advanced technologies” had “prompted companies to pursue listings with higher valuations amid the market recovery, so they can raise more funds to expand production and grab more market share”.

That focus on strategic sectors has accelerated a shift in the domestic flow of Chinese IPOs. Only two dozen out of more than 130 new listings this year went to the main markets of the Shanghai and Shenzhen stock exchanges with almost 80 per cent of funds raised instead on Shanghai’s science and technology-focused Star Market and Shenzhen’s tech-driven ChiNext Market.

On the Star Market, launched in 2019 with the backing of President Xi Jinping, semiconductor-related companies have already raised more than $6.6bn in 2022. China’s largest IPO this year, JinkoSolar, brought in almost $1.6bn on Star in January. Yet the steady flow of listings would not have been possible had the city’s financial sector not worked double-time during the lockdown.

Financiers in Shanghai said investment banks stationed staff at the offices of clients for months at a time this year so they would not be trapped in quarantine and prevented from conducting on-site due diligence. Such efforts ensured a furious pace of dealmaking despite the restrictions, with China averaging more than one IPO per trading day during lockdown. In total, investment banks priced 47 offerings and raised more than $8.7bn from the start of April to the end of May.

Because IPO regulations in China lock in the date of a stock’s trading debut well in advance, some companies that received approval to go public just before or during lockdown had little choice but to forge ahead despite a sell-off that at one point pushed the benchmark CSI 300 index as much as 24 per cent lower for the year. “If some of these companies were already at the last stage [of the IPO process] the lockdown doesn’t really affect their listing plans,” said Dickie Wong, head of research at Kingston Securities in Hong Kong.

The rise in domestic share sales this year also followed a regulatory crackdown on the country’s tech and internet sector launched by Beijing almost 12 months ago, which has disrupted a pipeline of deals previously slated for New York or Hong Kong. Investment banks are waiting for officials to finalise foreign listings rules for groups with large amounts of user data, resulting in about 95 per cent of IPO fundraising by Chinese companies this year being carried out domestically.


“There is a trend among pre-IPO private companies that previously were quite definitively seeking to get listed offshore in Hong Kong or the US — some of them are now looking more seriously at mainland listings”, said an IPO lawyer at one international firm based in Shanghai. Heading into the third quarter, bankers said improving sentiment would encourage larger listings, which require more personnel to pull off.

Valuations for Chinese equities have rebounded in recent weeks as lockdown restrictions have eased, with the CSI 300 up more than 14 per cent from its low in late April. “With big IPOs, you have to delay since you need to get the paperwork filed and do the groundwork first,” said a banker at one medium-sized brokerage.

China IPO fundraising doubles US total to top global ranks

Government officials camped out at Shanghai bourse to ensure steady flow of listings during lockdown

www.ft.com

 

[beijingwalker]

China winning in down-market chips​

Park Sung-hoon

June 20, 2022

Korea has incurred a deficit in trade with China for the first time since August 1994. According to the Korea Customs Service, exports to China in May totaled $13.4 billion, while imports reached $14.9 billion to cause a deficit of $1.1 billion. The red has already stretched to $600 million in the first 10-day trade this month. For the first time since the normalization of relations between the two countries, the surplus end has changed.

Korea International Trade Association (KITA) Beijing branch has embarked on an examination of the alarming turnaround. Of Korea imports from China, 16.5 percent were semiconductors, 10.3 percent precision chemicals and 5.5 percent computers. Chip imports from China in May totaled $2.4 billion, up 40.9 percent on year. Chips were also Korea’s top export to China, but Korea’s chip imports from China have grown four times faster, contributing to the deficit. What has caused such change?

China has been going all-out to localize chipmaking technology amid U.S. containment. It has been as eager with semiconductors as with its nuclear, thermonuclear weapons and satellite developments in the late 1960s. While announcing the “Made in China 2025” roadmap in 2015, Beijing prioritized next-generation IT and semiconductor technology among its 10 strategic industries and created a national chip fund.

According to the China Semiconductor Industry Association (CSIA), the Chinese government provided 138.7 billion yuan ($20.8 billion) to its top 50 chipmakers and designers through 2019. In a five-year plan announced in 2020, Beijing pledged chip funding of 204.1 billion yuan. China’s State Council — the country’s top executive body — vowed 1 trillion yuan in chip funding through 2025.

The chip industry has rapidly changed as a result. First, China’s chip design, or fabless technology, has been advancing fast. According to Taiwanese market researcher TransForce’s ranking for the first quarter, published on June 9, China’s Will Semi ranked No. 9 in the global chip design market nearly on par with such majors as Qualcomm, NVIDIA, Broadcom and AMD for the first time. Will Semi specializes in designing complementary metal-oxide semiconductors (CMOS) for image sensors.

The fabless industry is ascending rapidly in China due to strong demand. There are over 1,600 chip design houses in China. They design not just chips of 14-or-under nanometer class CPUs for computers or application processors for mobile phones but also various types of chips for other functions. They focus on mass-market chip designs to meet the demand for a diverse range of chips.

Second, Chinese players are seeking economies of scale in budget chips. Samsung Electronics and Taiwan’s TSMC are vying in next-gen chips of the 3-nanometer class. But China’s top foundry player SMIC has only one 14-nanometer class fabless plant in Shanghai. Their mainstay is in chips of 28-or-over nanometer class. They cannot migrate to chips of higher performance due to the U.S. ban on ASML exporting to China its extreme ultraviolet radiation (EUV) equipment — essential to inscribing tiny circuits on chips — beyond the 7-nanometer class.

SMIC had to turn to more mass-market chips that do not require sophisticate foreign equipment, which helped bolster its financial performance. China produced 359.4 billion chips last year, jumping 33.3 percent on year. According to the Semiconductor Equipment and Materials International (SEMI), China was the biggest buyer of semiconductor production equipment for two straight years. Last year, it imported $29.6 billion worth, although they were not in the most advanced form. The Bloomberg observed that the surge in China’s chip production capacity will translate into greater global reliance on Chinese supply.

Ko Young-hwa, a researcher at the Center for Korean Peninsula Studies at Peking University, pointed out that since there were over 70,000 chip-related companies in China, Korea will be buying more chips from China than selling. “It is the typical result of China’s human wave attack,” said Ko. Korea must study the status quo of Chinese companies, as it lacks understanding of the Chinese chip power.

Third, China is deemed highly competitive in machine deep-learning AI chips necessary for biometric and voice applications as a result of the Chinese technology development.

Amid the Covid-19 pandemic, China has enhanced facial recognition function of CCTVs and thermal cameras. It also has advanced the sensor technology to detect obstacles for self-driving vehicles. Since it cannot catch up with Intel or Qualcomm in CPU design or Samsung Electronics in memory chipmaking, China targeted a niche market for the future.

According to Lee Woo-keun, a professor of nano and micro mechanics at Tsinghua University, China can hit a jackpot in sensors and AI chips thanks to its enormous investment in the sector. “Korea must pay heed to the development in the semiconductor front in China as local universities have been investing heavily to groom talents, which could be China’s future advantage,” he stressed.

China winning in down-market chips

Korea has incurred a deficit in trade with China for the first time since August 1994.

koreajoongangdaily.joins.com

 

[8888888888888]

Look like it backfired like the arms embargo.

 

[beijingwalker]

China’s chip industry growing faster than anywhere in the world, It looks like Trump’s tech war made things worse.​

by NICK FARRELL
on 22 JUNE 2022

It looks like Trump’s tech war made things worse.

China's chip industry is growing faster than anywhere else in the world, after US sanctions on local champions from Huawei to Hikvision spurred appetite for home-grown components.

Nineteen of the world's 20 fastest-growing chip industry firms over the past four quarters, on average, hail from the world's No. 2 economy, according to data compiled by Bloomberg. That compared with eight at the same point last year.

Those China-based suppliers of design software, processors and gear vital to chipmaking are expanding revenue at several times the likes of global leaders TSMC or ASML.

That supercharged growth underscores how tensions between Washington and Beijing are transforming the global $550 billion semiconductor industry -- a sector that plays an outsized role in everything from defense to the advent of future technologies like AI and autonomous cars.

In 2020, the US, under President Donald Trump, began restricting sales of American technology to companies like Semiconductor Manufacturing International and Hangzhou Hikvision Digital Technology, successfully containing their growth. However the move seems to have backfired by fueling a boom in Chinese chip-making and supply.

China’s chip industry growing faster than anywhere in the world

It looks like Trump’s tech war made things worse China's chip industry is growing faster than anywhere else in the world, after US sanctions on local champions from Huawei to Hikvision spurred appetite for home-grown components. Nineteen of the world's 20 fastest-growing chip industry firms...

www.fudzilla.com

 

[beijingwalker]

When the chips are down, U.S. will suffer​

July 3, 2022

confrontation is shaking the international order established after World War II. After basic principles such as free trade and multilateralism collapsed, globalization and economic integration have become ideas of the past. As trade and investment have to be protected and carefully managed, decoupling, supply chains and industrial policy have become new buzz words. The dramatic shift in global politics demands entrepreneurs pay special heed to the diplomacy of their governments — and geopolitical variables — more than efficiency.

Semiconductors are at the front of the disrupted global order. After declaring investments in chips a core strategy of the United States to “win a 21st-century contest,” President Joe Biden visited a Samsung Electronics chip factory in Pyeongtaek on the sidelines of his summit with President Yoon Suk-yeol in May. Earlier in March, he proposed a “Chip 4 Alliance” with Korea, Japan and Taiwan,

The chip alliance is at the crest of America’s multilayered network strategy to compete with China. After unifying Germany in 1871, Otto von Bismarck, the Iron Chancellor, isolated France — Germany’s archenemy — by devising such a multilayered alliance strategy. He established the Three Emperors’ League with Russia and the Austro-Hungarian Empire — both enemies to one another — with Germany at the center. He went on build a bilateral alliance with the Austro-Hungarian Empire in 1879 followed by the Triple Alliance by inviting Italy in 1882. Shortly after the dismantling of the Three Emperors’ League, Bismarck secretly stuck the Reinsurance Treaty with Russia in 1887.

Just like Germany at the time, the U.S. keeps on building multilayered plurilateral networks — as seen in the establishment of the Aukus, the trilateral cooperation among Korea, the U.S. and Japan, the Indo-Pacific Economic Framework (IPEF), and the strategic cooperation between NATO and Indo-Pacific — all to help put pressure on China. The U.S. wants to add the Chip 4 Alliance to the existing alliance based on shared values and military and economic interests.

Semiconductors are an indispensable component of high technology and military industry for national security. They are Korea’s largest export item and China’s biggest import item. Chips are known to affect over 40 percent of the global GDP directly or indirectly.

After suffering a critical shortage of chips during the pandemic on top of a deepening standoff with China, the United States recognized the need to domestically produce semiconductors. Despite its unrivalled chip design ability, America has relied on foreign foundries for the manufacturing of chips. As a result, domestic chip production in the U.S. accounts for only 10 percent of global production. Simply put, the U.S. does not have the capability to produce chips the size of seven or five nanometers. Such cutting-edge chips constitute a pivotal part of artificial intelligence (AI), which could change the features of modern warfare dramatically.

So, if China outpaces America in the chip field or has the ability to stop cutting-edge chip supplies to the U.S., China can hold the high ground in nearly all areas of war with Uncle Sam, according to a 2021 report by the National Security Commission on Artificial Intelligence (Nscai) under the U.S. Congress. The report warned of the possibility of China winning if it attacks the U.S. with AI-based sophisticated weapons.

The $52-billion CHIPS for America Act aimed at fostering a cutting-edge semiconductor industry in the U.S. is waiting for approval by Congress. The Biden administration strongly demanded massive investment in the U.S. from foreign industry leaders like Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC). Thanks to its strength in top-notch foundry services, TSMC attracts keen U.S. interest. Defense analysts even say that China cannot provoke Taiwan easily due to its “silicon shield.”

A heated contest to lead the semiconductor industry is going on. Korea’s future hinges on how wisely the government weathers these challenges. The Yoon Suk-yeol administration must find effective ways to address them either by creating an efficient private-public-academic collaboration system or easing stifling regulations across the board or raising quality talent for chip production.

When the chips are down, U.S. will suffer

The Yoon Suk-yeol administration must find effective ways to address them either by creating an efficient private-public-academic collaboration system or easing stifling regulations across the board or raising quality talent for chip production.

koreajoongangdaily.joins.com

 

[_Nabil_]

The $52-billion CHIPS for America Act aimed at fostering a cutting-edge semiconductor industry in the U.S. is waiting for approval by Congress. The Biden administration strongly demanded massive investment in the U.S. from foreign industry leaders like Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC). Thanks to its strength in top-notch foundry services, TSMC attracts keen U.S. interest. Defense analysts even say that China cannot provoke Taiwan easily due to its “silicon shield.”

$48 billions gone to Ukraine

 

[StraightEdge]

China winning in down-market chips​

Park Sung-hoon

June 20, 2022

Korea has incurred a deficit in trade with China for the first time since August 1994. According to the Korea Customs Service, exports to China in May totaled $13.4 billion, while imports reached $14.9 billion to cause a deficit of $1.1 billion. The red has already stretched to $600 million in the first 10-day trade this month. For the first time since the normalization of relations between the two countries, the surplus end has changed.
--------------
Of Korea imports from China, 16.5 percent were semiconductors, 10.3 percent precision chemicals and 5.5 percent computers. Chip imports from China in May totaled $2.4 billion, up 40.9 percent on year. Chips were also Korea’s top export to China, but Korea’s chip imports from China have grown four times faster, contributing to the deficit. What has caused such change?

This could be an alarming trend for S.Korea. I could not have believed this news 5 years back. Though I think they are much better placed than Japan.

 

[Dalit]

This is why it is good to keep the US bogged down in wars and other irrelivant issues. Let papa America play the grandad of the world and China get ahead of the pack silently.