Shenzhen, China to expand semiconductor cluster, announces semiconductor development plan
China does not give up its semiconductor business despite all-round U.S. regulations
The prospect of a prolonged US-China conflict raises concerns regarding the Korean semiconductor industry
[아시아경제 김평화 기자] Although the US is adding regulations on semiconductors to China every day, China seems to be continuing its semiconductor business by expanding its semiconductor support policy. It is evaluated that the concerns of the domestic semiconductor industry will inevitably increase as the competition for hegemony between the United States and China continues in the semiconductor industry.
According to the Hong Kong media South China Morning Post (SCMP) on the 16th, Shenzhen City, Guangdong Province, China announced a plan for the development of the semiconductor industry on the 8th (local time). The plan includes subsidies of up to 1.5 billion yuan per facility when semiconductor companies in Shenzhen upgrade their production lines. It has decided to provide up to 10 million yuan per year to support advanced semiconductor research and development (R&D). It also promised subsidies of up to 10 million yuan to companies using open semiconductor design technology or using Chinese semiconductor electronic design automation (EDA) software. Infrastructure costs such as water and electricity are also supported.
This plan drew attention following the US announced the export restrictions on semiconductor equipment. This is because the U.S. has come up with a plan to nurture its own semiconductor industry as China responds to the situation in which regulations on China are getting stricter day by day. “As the US tightened regulations on China, Shenzhen promised local subsidies and cash compensation to semiconductor companies,” the SCMP said.
Earlier, on the 7th (local time), the U.S. Department of Commerce banned the export of semiconductor equipment to Chinese companies that produce DRAMs of 18 nanometers (nm, 1 billionth of a meter) or less, NAND flashes of 128 or more layers, and logic semiconductors of 14 nm or less. announced. Previously, there were regulations such as asking the Dutch company ASML to ban the export of extreme ultraviolet (EUV) exposure equipment, which is essential for the tip-end process, to China, but this time, the scope of the regulation was expanded to all directions. Exports of U.S. EDA software and graphic processing units (GPUs) for artificial intelligence (AI) to China are also blocked.
Despite the sanctions imposed by the U.S., China is continuing its semiconductor business by expanding its semiconductor production facilities in Shenzhen and Shanghai. Shenzhen used to be a place where semiconductor integrated circuit (IC) design related companies were mainly located. Shenzhen plans to create a comprehensive semiconductor cluster including design, production, and packaging in the region in the future. In June, it also announced that it would expand its cluster sales from 110 billion yuan last year to 250 billion yuan by 2025. Despite the huge support from the Chinese government, 3,420 local semiconductor companies closed due to bankruptcy last year alone.
As semiconductors have emerged as the core of global technological hegemony, the semiconductor industry and experts believe that the tug of war between the US and China will continue over related industries. At a time when Chinese President Xi Jinping’s third term of office has actually been decided, some analysts are suggesting that Xi’s long term in office might intensify the conflict between the two countries. As the United States is also taking a hardline attitude, saying it will cut off China’s semiconductor boom, the conflict between the two countries in the semiconductor field is expected to continue in the future.
In this case, domestic semiconductor companies such as Samsung Electronics and SK Hynix, which have factories in China and conduct business, are inevitably worried. The proportion of NAND flash produced by Samsung Electronics in China is regarding 40% of the total. SK hynix accounts for 50% of total DRAM production in China alone. The fact that it cannot ignore the Chinese market, the largest consumer of semiconductors, adds to the concern. An official from the semiconductor industry explained, “From the perspective of domestic semiconductor companies, there are many foods in the nearest market, and it will be difficult to forsake them.”
It is a positive factor that the US decided to restrict the export of various semiconductor equipment to China, and that it would suspend the regulations for one year to major domestic and foreign semiconductor companies including Samsung Electronics and SK Hynix. However, it is evaluated that the long-term risk factors remain the same as this is a temporary measure and the situation can change rapidly at any time depending on the future conflict between the US and China. The fact that US semiconductor equipment makers are already showing signs of withdrawing from the Chinese business is also raising concerns. Lee Hyuk-jae, a professor in the Department of Electrical and Computer Engineering at Seoul National University, predicted, “From a long-term perspective, this problem (the US-China conflict) is unlikely to be resolved.”
Reporter Kim Pyung-hwa peace@asiae.co.kr
