Chinese Chip Manufacturing is Changing

On October 7, Washington introduced restrictions preventing Chinese semiconductor manufacturers from obtaining United States-made equipment needed for the task. Since then these Chinese companies have been looking to domestic suppliers for the needed equipment.

The goal is to receive the needed equipment from domestic manufacturers and if it is not available then seek other imports from Japan. There are a few concerns, however, one of them being that Chinese-made equipment lacks much of the technology compared to U.S.-made equipment. Others are also concerned that this rapid growth of demand for domestic manufacturers may be short-lived.

Many semiconductor manufacturers such as YMTC and CXMT have chosen to put expansion plans on hold due to the difficulty of finding more advanced equipment. While domestic equipment manufacturers have enough equipment for the desired expansions if the companies do not find high-tech alternatives to the U.S. equipment the sudden surge in demand could be put to a quick end.

The reduction in demand could result in as much as a 20% reduction in forecasted revenue for leading Chinese semiconductor equipment manufacturers.

Source: Financial Times