The Office of the Director of National Intelligence (DNI) said in its annual threat assessment that US export controls on China could lead the country to dominate the global industry in "low-capability" chip technology, foreign media reported.
DNIDNI also warned in its report that China, which is rapidly building new chip factories, remains "the biggest threat to U.S. technological competitiveness," with restrictions on advanced chips leading the country to focus on meeting the world's demand for lower-tier chip technology. Chip Master recently reported Boots landing! ASML confirmed that the restriction on the export of advanced DUVs to China, as Western restrictions on the lithography of advanced logic and memory equipment to China have spread to non-advanced processes, theoretically, if the restriction continues to be extended to all DUV systems, subsequent fabs in mainland China may have to fall back to mature nodes above 40/45nm+. Specific to the product and application level, mature nodes can currently mass produce a wide range of chips including general logic IC, analog IC, driver IC, MCU, PMIC, RF and power devices. The advantage of focusing on the low-end market is that it can satisfy the extensive substitution demand and self-sufficiency rate of the domestic market, but the bigger question is how long will the mature nodes stick with us?
Figure Source: SEMIDNI said the Chinese government was "redoubling its efforts to promote indigenous innovation and self-sufficiency" similar to those in civilian and military industries. "As China faces difficulties with export controls from Western countries, it is focusing on less capable commodity chip technologies, where China could become a power. That could eventually make some buyers more willing to rely on China." China is also leading the world in building new chip plants and is expected to account for 18 percent of global manufacturing facilities by 2025, up 7 percent from 2019. Like shirts for planes, China's massive building capacity and market size cannot be eliminated, and Americans know it.
For China, which has gone through a 40-year process of upgrading low-end manufacturing, chip manufacturing may be the last step to make up for and complete true industrialization. Being forced to go low-end is not necessarily a bad thing. Chip master and a number of industry insiders have done a survey: epidemic this "black swan" and export control this "gray rhinoceros" for the advantages and disadvantages of domestic chip manufacturers? As a result, people in the industry generally believe that under the normal situation and market competition, the process of replacing domestic brands will be slower. Under special circumstances, the price, delivery time and even quality are not insurable gaps. Objectively, the strong demand brought by the early stage of the epidemic and the supply chain reorganization caused by partial export control have made some original domestic chip manufacturers stand firm. For example, they have completed the long-term replacement of international brands in the fields of universal logic, analog and MCU, and continue to force these brands to give up part of the middle and low-end market, which is beneficial for us to form a positive cycle relying on the local market.
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