CHINA-S&T: CHINA'S EFFORTS AT MAKING CHIPS AND MICRO-CHIPS

An article in Bloomberg (March 2) stated that China just can’t produce what the world needs by way of chips and chipmaking machinery. Its self-sufficiency in semiconductors remains low: it exports about $100 billion worth of chips but imports more than $300 billion. Meanwhile, according to HSBC Holdings Plc. estimates China makes 28% of the semiconductor production equipment required by chipmakers. The chip foundries and production lines that have been set up in China require imported machinery. Last year, $13.7 billion of semiconductor equipment came in from overseas, up over 30% from the year before.  It said that China has made some progress in low-end processes of the multi-step chipmaking procedure, but is still decades away from more complex operations. The Shanghai-based Semiconductor Manufacturing International Corp., for example, is a few generations behind global leaders like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. Up until 2015, the Chinese company produced much older technology and China hasn't been able to break into the bleeding edge. It cited the example of lithography, a critical step in chipmaking, where light is used to transfer circuit patterns to a film, which is then used to make individual microprocessors. It said this can take more than 10 years to develop the so-called extreme ultraviolet tools for lithography and the market has consolidated around just three players because it is so capital- and knowledge-intensive. China’s imports of lithography equipment rose 97% last year. China's solitary company that makes the machinery: Shanghai Micro Electronics Equipment Ltd., expects to deliver equipment that uses an older lithography technology either this year or in 2022.





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