China chip industry insiders voice caution on catch-up efforts

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Since the U.S. government put Huawei Technologies Co Ltd on a trade blacklist, e...

SHANGHAI/HONG KONG - Since the U.S. government put Huawei Technologies Co Ltd on a trade blacklist, effectively banning American firms from doing business with it, China’s leaders have spoken boldly about achieving self-sufficiency in the critical semiconductor business.

Chinese chip engineers tell tales of local manufacturing that just is not up to snuff, while analysts point out the many areas where China remains reliant on technology from the United States, Taiwan, South Korea, Japan and Europe, with some questioning whether government policies are in the right place.

One of China’s biggest challenges, however, is in chip manufacturing, an exacting process that requires both highly specialized tools and many years of experience to master.“The manufacturing process relies on equipment, and U.S. firms such as AMAT, LAM, KLA and Teradyne have very high market share in many niche markets,” Everbright wrote. “There is no production line in China that uses only equipment made in China, so it is very difficult to make any chipsets without U.S. equipment.

“Equipment vendors are all under NDA with TSMC,” says the engineer. “If SMIC asks a vendor for instructions, the vendor will only disclose very basic information about the instructions, just to show good faith,” he says. SMIC said it was committed to meeting customer needs. “Our 14nm technology will start risk production by 2019, 12nm process development is completed and under customer verification,” a spokesman said.The talent shortage comes up repeatedly, with some analysts noting that it took Japanese, South Korean and Taiwanese firms decades to develop their expertise.

 

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