In today’s global semiconductor industry, the “temperature difference” between China and the international market seems to be more obvious, and especially after US-imposed trade restrictions the situation has become more prominent. Until now there was a very large “dependence” on the Chinese industry, but recently Europe also decided to invest a not inconsiderable amount to promote the development of this important industry, but to what extent do we depend on China in this regard? Can we become “independent”?
Since the launch of the “grand fund” in 2014 for the mainland China market, the semiconductor industry is booming in the country but now with trade restrictions more fuel has been added to the fire, and the scene of the last two years begins To worry because obviously this situation is holding back development to the point that Europe has realized that it needs to “not depend” so much on China and has put more meat on the spit to promote the semiconductor industry.
The semiconductor industry depends on China
The semiconductor industry has boomed in China since that injection of funds in 2014, and has developed by leaps and bounds in the past six years. In the United States, Europe, Japan and South Korea, the development of this industry has been slower, step by step, with a much more sedate growth.
Now, with the emergence of trade restrictions, a barrier has been placed between two industries that are the same but operated at different rates in an attempt to “stop” China in terms of development, something that seems unlikely when the simplest would have been merge the two forces to promote an even faster development, but above all more homogeneous that will benefit everyone.
Because of the restrictions, exchanges and trade between China and the international semiconductor market are in a dead end in many cases and to the detriment in others since there are several companies that have already left the country and many others that seek do what.
Despite this, mainland China is the world’s largest semiconductor consumer market, as there are a large number of international companies that base their activity in the Asian country, including the sale of chips and raw materials. Plus, the most advanced wafer factories are there, and that includes plants from IDM, TSMC, Samsung, SK Hynix, and Intel, for example.
To put this in perspective, 41.57% of South Korea’s semiconductor imports come from China. On the other hand, even after Trump’s restrictions on Huawei with which it was expected that exports to China from Samsung and SK Hynix would decrease, in the end, because of COVID, the opposite effect has been generated and Chinese demand for semiconductors has been seen increased.
In other words, the US government has imposed vetoes in an attempt to slow down the Chinese market, and although it is true that in some segments this is causing many problems in the industry, the reality is that the world continues to depend too much of China in this regard as to be able to become independent from its industry.
China also depends on the rest of the world
Mainland China has a large market, but the overall level of semiconductor technology is relatively low, especially for high-end products whether they be logic such as high-performance processors, GPUs, FPGAs or DRAM memory. Analog devices and chips are not yet self-sufficient and depend on imports: in other words, China also needs to import in order to make the products that it then exports.
At present, the annual import of chip components in China has exceeded 300,000 million dollars, and therefore Chinese semiconductors also depend on the rest of the world, and a lot; If there were a total trade closure to China, they would not be able to continue making chips, no more, no less.
In the semiconductor industry, initially the entire market was based on China, and China was also based on the international situation. If the original pace of development can be maintained, a complementary and harmonious situation can occur, unless the US continues on the same paths that President Trump began.
And it is that these restrictions on international trade have broken the balance, not only dividing China from the rest of the world but also causing a certain degree of fragmentation within each of the countries. For example, in the European, Japanese and Korean markets the semiconductor business community has a tendency to restore the original state of open trade (proof of this was the CFO of ASML saying that if the US prohibited them from exporting their machines to China from there, they would do it from Holland), but in the end it all depends on the regulatory agencies of these markets.
In China, the different trends of independent R&D and open cooperation have become more obvious and the debate has become increasingly fierce. All this has added more uncertainty to the development of the semiconductor industry, and the reality is that instead of seeking a partnership for mutual benefit, what is being achieved is that the industry is stagnant by a thought of “neither eat nor leave. eat, “which is what the Trump administration has done.