The semiconductor arms race is heating up with several new developments happening; perhaps the biggest being Japan and the Netherlands joining the U.S. trade restrictions on China.
According to a report from Bloomberg, Japan and the Netherlands have agreed, in principle, to join the U.S. in tightening controls over the export of advance chipmaking machinery and semiconductors to China.
The U.S. began restrictions under the Trump Administration by limiting of exports of technology to equipment vendor Huawei and later expanded the export trade restrictions to China’s leading foundry Semiconductor Manufacturing International Corp. (SMIC).
However, under the Biden Administration, the U.S. has expanded the scope of the trade restrictions tightening the limits of what can be shipped to companies in China, specifically advanced semiconductor equipment and high-performance computing chips such as CPUs and GPUs.
The goal is to cut China off from advanced process technology that is used to create state-of-the-art semiconductors incorporated in the latest consumer electronics technology, communications and military and science applications.
Getting both Japan and the Netherlands to join the U.S. in restrictions, and with the U.K. also starting to implement its own restrictions, could deal a significant blow to China’s technology ambitions.
Adopting restrictions
According to Bloomberg, Japan and the Netherlands are likely to announce they will adopt some of the same measures the U.S. has taken in the coming weeks.
This will likely include the restrictions on selling advance semiconductor manufacturing equipment. Earlier this year, the U.S. asked Dutch extreme ultraviolent (EUV) lithography maker ASML to restrict the sales of lithography and other tools used in advanced process technology to Chinese vendors.
However, ASML still sold non-EUV lithography machines to China. Non-EUV lithography machines form the bulk of the equipment used in semiconductor fabs as most of these facilities are older process nodes.
At this point, it is unclear what exact restrictions will be implemented by both countries.
China fights back
After dealing with the blows from the U.S. trade restrictions, and after news broke regarding Japan and the Netherlands, the country came out swinging.
China filed a trade dispute at the World Trade Organization opposing U.S. chip export control measures and the country also plans to invest $143 billion to support its domestic semiconductor making industry — a huge leap over the U.S.’s CHIPS and Science Act, which only accounts for $52 billion in investments, according to a report from Reuters.
Exiting 3D NAND?
A new market research report from TrendForce found that Chinese memory maker Yangtze Memory Technologies Company (YMTC) is now at risk of exiting the 3D NAND flash products by 2024 due to its placement on the Entity List of the U.S. Commerce Department.
YMTC was placed on the list after a group of U.S. senators lobbied the government to place restrictions on the company, claiming it was an immediate threat to national security and U.S.-based chip companies such as memory maker Micron Technology.
Previously, China agreed to let U.S. export control inspect YMTC but this was obviously not enough and starting now the U.S. Commerce Department will review and approve all transactions related to export and sale of equipment, technologies and other related goods from the U.S. to YMTC.
TrendForce said this will severely constrain YMTC and its foothold in the 3D NAND flash market. YMTC bit growth rate and total NAND flash supply bit growth rate were initially forecast to grow by as much as 60% for 2023 but now a correction will be made likely halting that significant growth, TrendForce said.
Additionally, flash buyers outside of China now harbor reservations about adopting YMTC’s technology including a U.S.-based smartphone brand that has held off on buying flash memory from YMTC, TrendForce said. Other companies have also temporarily halted sapling and adoption process of flash memory from YMTC.
Given it may be prevented from acquiring critical equipment for continued growth especially if the Netherlands and Japan join in the trade restrictions, TrendForce believes YMTC may be forced to exit the 3D NAND market entirely.
