In the past year or so, under the influence of political geography and technological control, the development of China's semiconductor industry has encountered greater obstacles to development. Among them, the most important one is reflected in semiconductor equipment. Recently, the British "Financial Times" reported on the product sales of Japan's largest semiconductor equipment manufacturer Tokyo Vitron (Tokyo Electronics) under export controls. "By expanding sales of low-end products to the Chinese chip industry, it has been in a lot of countries." To a large extent, it offsets the impact of export controls on China.”

Japan possesses the world's cutting-edge semiconductor technology, and Tokyo Weinig Technology is the world's third largest supplier of semiconductor manufacturing equipment, second only to Applied Materials of the United States and ASML, a major Dutch semiconductor company. Some of the company's business trends also have certain reference significance, which means that Chinese manufacturers are increasing their rush to purchase semiconductor equipment.

Mainland China is expected to maintain its first place in purchasing

In 2023, despite the global recession, mainland China's semiconductor equipment market will still maintain vitality, mainly because mainland China is still in the growth stage of development, and expectations for supply chain localization and industrial security development have begun to take root.

Recently, according to the latest forecast report of the International Semiconductor Industry Association (SEMI), global semiconductor manufacturing equipment sales are expected to resume growth in 2024, and are expected to show a strong recovery in 2025, with sales expected to hit a record high. Among them, China's purchases are expected to Continue to maintain the top spot.

SEMI predicts that global semiconductor equipment sales are expected to decline by 6.1% year-on-year to US$100.9 billion in 2023, which will be the first time in four years to shrink. However, the chip equipment market is expected to turn to growth in 2024, with sales expected to be US$105.3 billion. , a year-on-year growth of 4%. It is expected to grow significantly by 18% to US$124 billion in 2025, surpassing US$107.4 billion in 2022 and setting a new record.

SEMI CEO Ajit Manocha pointed out, “The semiconductor market is cyclical and is expected to experience a short-term decline in 2023. However, 2024 will be the turning point for recovery. In 2025, production capacity expansion, the construction of new wafer fabs and the development of advanced technologies will and solutions, a strong recovery is expected.”

From the perspective of regional sales, SEMI pointed out that as of 2025, mainland China, Taiwan, and South Korea will still be the top three regions for equipment investment. During this period, mainland China's chip equipment procurement volume is expected to continue to increase and maintain its first place. Semiconductor equipment sales in the Chinese market will exceed US$30 billion in 2023, setting a record high and widening the gap with other regions.

SEMI stated that global sales of semiconductor manufacturing equipment exceeded US$100 billion in 2022, reaching US$102.6 billion, setting a new record and growing by 44%, showing that the global semiconductor industry is actively increasing production capacity. SEMI pointed out that the driving force for the expansion of the semiconductor industry is not only due to the current imbalance between supply and demand, but also the continued accelerated development of the semiconductor industry to ensure a wide range of emerging high-tech applications. Mainland China became the largest semiconductor equipment market for the second time, with sales increasing 58% to US$29.6 billion, approaching US$30 billion, the fourth consecutive year of growth.

However, SEMI also stated that equipment investment in almost all regions will increase in 2024 after decreasing in 2023. However, after mainland China made huge investments in 2023, it is expected to decrease slightly in 2024.

Intended to contain China through semiconductor equipment

As early as 2022, the United States hopes that Japan and the Netherlands will tighten their requirements for high-tech export review to China and make export review to China more stringent, especially for the equipment and technology required to manufacture logic semiconductors below 14 to 16 nanometers. Controlling exports, effectively prohibiting exports to China.

According to a data from VLSI Research, the entire semiconductor manufacturing equipment market is mainly occupied by three countries: the United States (41.7%), Japan (31.1%) and the Netherlands (18.8%).

From the perspective of the global semiconductor equipment competition landscape, the United States, Japan, and the Netherlands have a monopoly position in the world. Among them, the United States has a greater advantage in the fields of etching and cleaning equipment, thin film deposition equipment, CMP equipment, process control equipment, and testing equipment; Japan has certain advantages in the fields of photolithography equipment, etching equipment, dicing equipment, and testing equipment. The Netherlands has great advantages in the field of lithography equipment.

After the United States introduced controls on semiconductor equipment, Japan and the Netherlands basically followed suit. In July this year, although officials from Japan's Ministry of Economy, Trade and Industry claimed "independent measures," they followed the same pace as the United States and began to implement new regulations on export control of semiconductor equipment.

It is reported that after the implementation of the new export control regulations, about a dozen semiconductor manufacturing equipment companies in Japan have entered the strict control list. Exports must be reviewed and approved by the Ministry of Economy, Trade and Industry. Countries and regions that have simplified review procedures include the United States, South Korea, and Singapore. , Taiwan, China and other 42 "friendly countries and regions", but does not include mainland China.

In September this year, the Netherlands also implemented relevant export controls. The slight difference was that it announced shortly afterwards that shipments of 2000i and the subsequently introduced immersion lithography systems to China would not be affected. That is to say, the Netherlands agreed to ASML continue to sell 2000i and more advanced lithography machine models to Chinese companies, and issued the necessary licenses to ASML from September 1, allowing it to continue shipping this year, but in 2024 Shipments will be banned next year.

Relatively speaking, the Netherlands hopes to make up for some market losses as much as possible through this form of "discounting" and at the same time establish an image of "both parties please" between China and the United States, that is, it does not dare to disobey the pressure of the United States. Nor do they want to lose the Chinese market.

But overall, mainland China will face more stringent semiconductor equipment controls in 2024, especially for higher-end semiconductor equipment. It needs to place its hopes on itself.

Japan is my country's largest source of equipment imports. According to statistics from the General Administration of Customs, my country's total imports of semiconductor equipment in 2022 will be US$34.719 billion, of which imports from Japan will be US$10.736 billion, accounting for 30.9%. Although Japan's semiconductor equipment imports fell year-on-year in the first half of this year, they increased month-on-month in June, and lithography equipment was even more snapped up.

Fragmentation of global supply chains

Previously, TSMC founder Zhang Zhongmou put forward the view that "semiconductor globalization is dead." He believes, “In view of the recent evolution of global geopolitics, from the perspective of the history of globalization and the pros and cons of the world, the current national security and economic priority trends have overtaken globalization, and may be relaxed and partially permitted. However, globalization It no longer exists.”

In fact, it is the regulation of semiconductor equipment that best illustrates his point. As the United States and the Netherlands ban the export of advanced semiconductor technology to China, some unrestricted older technologies in Japanese semiconductor equipment are being monetized. For example, Tokyo Weinig Technology has received more orders for older technologies.

Junko Takagi, Vice President of Investor Relations Department of Tokyo Weinig Technology, said: "Of course, we have been affected somewhat (export controls by Japan and the United States), but it is much smaller than we expected." Junko Takagi added that demand for lower-level semiconductor equipment was "really huge" and that Tokyo Veiny's revenue from China accounted for 43% of its total revenue in the third quarter, compared with 24% in the same period last year.

While increasing sales of some low-end semiconductor equipment to China, Tokyo Weili Technology also uses its technical expertise to cooperate with cutting-edge customers in the United States, Taiwan, Europe and Japan to accelerate research work. Recently, semiconductor giants such as IBM, Micron, Applied Materials, and Tokyo Electronics (Tokyo Power Technology) have reached a cooperation to invest US$10 billion to build a next-generation High-NA EUV semiconductor R&D center at the Albany NanoTech Complex in New York State, USA. The R&D center will develop and produce 2nm node and even more advanced chips. Unlike other semiconductor equipment manufacturers, Tokyo Weinig Technology's operating performance is greatly affected by control policies. On the contrary, it is "like a duck in water" in this industrial policy environment.

"There is indeed a general consensus among Japanese industry leaders that the global supply chain is bifurcating and splitting into two separate supply chains," Christopher Thomas, head of strategic consulting firm Integrated Insights, told a geopolitical conference at the Japan Semiconductor Exhibition. One faces the United States and the other faces China."

Now, more and more people realize that the world is splitting into two parts, one is the United States and the other is China. And they increasingly have to consider how to satisfy the division of labor and cooperation between the US and Chinese markets. Under technology control, China will further increase investment in independent innovation and strengthen local chip design and manufacturing capabilities to reduce dependence on external technology.

American economist David Goldman once warned that "the chip war may lead to the emergence of two completely different chip supply chains in the world, one dominated by the West and the other dominated by China." This view has also aroused concern. Extensive attention and discussion in the scientific and technological community.

Generally speaking, global geopolitics has greatly changed the competitive situation of semiconductor manufacturing, especially after so-called "national security" takes precedence over the economy, and globalization and free trade are unlikely to resume, at least in the semiconductor industry. A key industry of "technology base".

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