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Can chip giant Samsung withstand the impact of Japan’s export controls?

via:CnBeta     time:2019/7/11 13:32:07     readed:155

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A senior Japanese government official said that Japanese companies have been asked to stop all shipments until they get government permission on every order. He said the process could take up to 90 days or even longer, depending on individual circumstances.

Those familiar with Samsung's advanced chip manufacturing program said that some of Samsung's research projects have been affected. "Samsung has temporarily put aside some of the development of chips related to extreme ultraviolet (EUV) light, in order to ensure that the critical photoresist can be supplied in the future," said people familiar with the matter.

EUV photoresist is a coating product for EUV lithography that is critical for the most complex semiconductors. Any disruption in the supply of EUV photoresist may delay Samsung's plan to release a 7-nanometer chip early next year.

Advanced mobile and network processors are key to Samsung's flagship smartphones and 5G telecoms, but they are also the basis for Samsung's challenge to chip foundry TSMC. Samsung has developed an ambitious plan to increase its share of the advanced chip foundry market from less than 10% to 25% by 2023.

Analysts have expressed concern about Samsung's advanced chip project schedule. "We are still concerned about whether Samsung will be able to get enough high-end photoresist supplies for its state-of-the-art chip production projects in time," said Mark Li (Mark Li), a senior semiconductor analyst at Bernstein Research. "replacing photoresist suppliers is a very challenging thing."

"If this regulation cannot be quickly lifted, this restriction will eventually delay Samsung's production of autonomous new processor chips for smart phones," he said. "This may also undermine Samsung's ambition to introduce the most advanced chip production technology and prevent it from TSMC. Fight for share."

According to industry sources, the severity of the supply disruption will depend on the duration of the dispute between South Korea and Japan. Japan has admitted that they have pointed their finger at the Korean core industry in order to avenge the South Korean High Court’s decision to compensate Japanese companies for the forced recruitment of Korean workers during World War II.

This month, Japan’s accidental pressure on three semiconductor-related materials—photoresist, fluorinated polyimide, and high-purity hydrogen fluoride (etching gas) – has raised concerns about the global economy. Samsung and SK Hynix are the world's two largest suppliers of memory chips, controlling more than 70% of the global DRAM memory chip market and more than 40% of the global NAND flash memory chip market. They are highly dependent on Japanese suppliers for supplying most of these important chip manufacturing materials.

Tokyo Chemical Industry said it is “unsure” whether the new plant they plan to build in South Korea will begin construction as scheduled in 2020, which is designed to support its customers' advanced chip manufacturing projects. Another photoresist supplier, JSR, is not sure whether their Belgian factory can supply photoresist to Korean customers because some technologies are from Japan.

Shin-Etsu Chemical also supplies EUV photoresist to Samsung. The company only produces this product in Japan, so they are applying for an export license from the Japanese government, which takes 90 days.

A number of sources said that although Samsung is said to have accumulated three months of etching gas inventory for the production of storage and non-storage chips, the reserve of EUV photoresist coatings that are critical to advanced chip manufacturing is even more Hard things. EUV photoresists expire in a few weeks of opening, and storage conditions are critical, so long-term storage of large amounts of inventory is impractical.

“It is very rare for chip makers to store these materials,” said one chip industry executive.

Similarly, it is not practical to find alternative sources of Japanese EUV photoresist in the short term. “It is not entirely impossible to replace Japanese suppliers, but it takes a year to do this because the chip manufacturing process and chip design must be renewed. Test it completely," said a person familiar with the matter.

Challenge TSMC frustrated

Only a small number of large chip manufacturers such as Samsung and TSMC have mastered expensive and complicated technologies to produce 7-nanometer chips. TSMC is expected to become the first company to bring EUV-based chips to market by the end of this year.

For a long time, Samsung has been the global market leader in DRAM memory chips and NAND flash memory chips, producing chips for its own products and external customers. The news said that Japan's export controls do not seem to have a serious impact on Samsung's memory chip production, because the industry has been facing a sluggish chip price due to oversupply.

However, if Japan’s export controls continue and suppliers’ export applications are not quickly approved, Samsung’s ambition to challenge TSMC to become the world’s largest chip maker may be delayed.

Samsung announced in April that it plans to invest 133 trillion won (about $113 billion) by 2030 to strengthen its non-storage logic chip business. Samsung’s move is widely seen as a global agent’s dominance aimed at challenging TSMC.

As the world's two largest semiconductor manufacturers, Samsung and TSMC have been racing to develop the world's most advanced chip production technology to support cutting-edge processors, artificial intelligence and modems.

inapplethe company,HuaweiWhen chip designers such as Samsung, Qualcomm and NVIDIA embraced new technologies such as 5G, AI and autonomous driving, they began to tend to stand in different camps. Apple and Huawei are customers of TSMC, while Nvidia and Qualcomm tend to place orders with TSMC and Samsung at the same time.

Qualcomm has not commented. Nvidia said in a statement that the company uses both TSMC and Samsung's manufacturing technology. "We plan to continue using the two companies in the future."

Samsung has not commented. Japanese media reported earlier that Lee Jae-yong, the actual head of Samsung Group and vice chairman of Samsung Electronics, went to Japan on Sunday to meet with executives of large banks and business partners.

South Korean President Wen Zai said to three senior executives of South Korean companies including Samsung on Wednesday: "Although we are making diplomatic efforts to solve this problem, we cannot rule out the possibility of Japan extending export controls." (Author / 箫rain)

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