Factbox: Chinese chipmakers caught in U.S.-China tech spat

Hua Hong Grace Semiconductor

31/01/2023 06:59

By Josh Horwitz
       SHANGHAI, Jan 31 (Reuters) - China's semiconductor
industry has become a key target of the United States, which has
imposed a slew of export restrictions targeting several parts of
the country's chip sector supply chain as it bids to slow its
rival's technological advancement.
    While Beijing has ploughed vast sums of money into
cultivating a domestic chip industry, its fabrication plants,
known as fabs, still heavily rely on foreign-made equipment that
they use to turn slabs of silicon into chips that power
hardware.
    Below are the Chinese fabs that are bearing the biggest
brunt of Washington's curbs:
    SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORP (SMIC)
    SMIC  0981.HK , China's largest fab, makes chips that go
into a range of products for the automotive sector,
internet-of-things devices and some smartphones.
    Founded in 2000 with backing from the Shanghai government,
the firm stands as China's would-be rival to Taiwan
Semiconductor Manufacturing Co Ltd (TSMC)  2330.TW , though it
is dwarfed in technology and income. TSMC is the world's most
valuable chipmaker and counts Apple Inc  AAPL.O  and Nvidia Corp
 NVDA.O  among major clients. 
    Its government-backing and ambition to make high-end chips
caught the attention of the United States which put the firm on
its Entity List in 2020. The placement effectively barred Dutch
firm ASML Holding AS  ASML.AS  from providing critical Extreme
Ultraviolet lithography machines to SMIC, scuttling that
ambition.
    To date, most of SMIC's sales are made using the outdated 45
nanometer process node and above. Since late 2020, this
specialisation in older chips has proven a boon due to a global
shortage of lower-end chips. 
    Still, its global market share in the pure-play foundry
sector remains in the single digits, and its sales and
research-and-development expenditure remain well below those of
TSMC.
    The company shocked the industry in 2022 when researchers
discovered it had produced a chip that appeared to share
qualities with TSMC's 7 nanometer process node technology, even
without ASML equipment.
    Experts disputed the long-term viability of its
breakthrough. SMIC has not responded to the findings.
    HUA HONG SEMICONDUCTOR LTD
    Hua Hong Semiconductor Ltd  1347.HK  is China's
second-largest fab. It was founded in 1996 and specialises in
making mature-node technology, generating most of its revenue
from chips made at the 55 nanometer process node and above. 
    The firm has devoted fewer resources to producing advanced
nodes than SMIC. It plans to conduct an additional public
offering in 2023, and aims to build a new fab in the eastern
city of Wuxi.
    YANGTZE MEMORY TECHNOLOGIES CO LTD (YMTC)
        YMTC is China's only player in the global NAND memory
market - an ultra-competitive sector long dominated by a handful
of firms from the United States and Korea. It designs and makes
chips and was added to the U.S. Entity List last year.
    While YMTC's market share of the overall sector is small,
experts said it has steadily entered the Chinese supply chain
and that its products have become more competitive on price and
quality.
    It unveiled a chip last year with 232 layers of memory
cells, placing the firm closer to rivals such as South Korea's
Samsung Electronics Co Ltd  005930.KS . Experts said equipment
export restrictions are likely to derail further efforts.
    YMTC was founded in 2016 with backing from the Wuhan
government and China National Integrated Circuit Industry
Investment Fund, and originally operated under chip conglomerate
Tsinghua Unigroup. It was later spun out as its parent company
restructured while facing bankruptcy.
    CHANGXIN MEMORY TECHNOLOGIES (CXMT)
    CXMT is China's only major player designing and making DRAM
chips, which like NAND memory, is a sector long dominated by a
handful of legacy companies in the United States, South Korea
and Taiwan.
    It has one fab in operation and is building two others. It
produces DRAM at the 19 nanometer node and is moving into the 17
nanometer node - process nodes behind the industry leading-edge.
    Researcher Trendforce wrote that the impact from equipment
export restrictions imposed since October might affect expansion
plans.
 (Reporting by Josh Horwitz; Editing by Brenda Goh and
Christopher Cushing)
 ((Josh.Horwitz@thomsonreuters.com; +86 21 20830007;))