"China, a Major Buyer of Semiconductor Manufacturing Equipment... US Companies Face Dilemma Amid Government Pressure"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] An analysis has emerged that U.S. semiconductor manufacturing equipment companies, which have led this market, are facing a dilemma as the Biden administration restricts the import of semiconductor manufacturing equipment to curb China, which is rapidly developing its domestic semiconductor industry under the 'semiconductor rise' policy.

On the 25th (local time), the British influential current affairs weekly The Economist analyzed this in an article titled "The U.S. plans to strangle China's semiconductor manufacturers," noting that the sales of U.S. semiconductor manufacturing equipment companies to China have significantly increased in recent years.

According to the report, five semiconductor manufacturing equipment companies, including three U.S. firms?Applied Materials, KLA, Lam Research?and Japan's Tokyo Electron and the Netherlands' ASML, sold products worth $3.3 billion (approximately 4.12 trillion KRW) to China in 2014. This accounted for about 10% of the global market.

However, last year, China emerged as the country with the largest share in the semiconductor manufacturing equipment market. On the 12th, the Semiconductor Equipment and Materials International (SEMI) announced in its "World Semiconductor Equipment Market Statistics Report" that global semiconductor equipment sales reached $102.6 billion last year, a 44% increase from the previous year, with China recording $29.6 billion, ranking first for the second consecutive year. China's manufacturing equipment sales growth rate was 58%, the highest among major countries.

In particular, of Applied Materials' total sales of $23 billion, $7.5 billion came from China, and for Lam Research, one-third of its $14.6 billion sales were generated in China. The proportion of U.S. companies' sales in China has significantly increased.

[Image source=Reuters Yonhap News]

The Economist stated, "This new dependence has created especially greater political and industrial problems for the three U.S. companies," adding, "Since the three U.S. companies handle different parts of the semiconductor manufacturing process, advanced U.S. technology is helping China achieve its economic goals."

In response, the Biden administration has been working since early in its term to prevent semiconductor manufacturing equipment from flowing to Chinese semiconductor companies. A representative case is the inclusion of Chinese semiconductor company SMIC on the export restriction list in December 2020. Regarding this, The Economist reported that Applied Materials expressed concerns that the Chinese government is heavily subsidizing its domestic semiconductor companies, and that funding flows to manufacturing equipment companies, potentially allowing other competitors in the manufacturing equipment market to take their place.

Given this situation, U.S. semiconductor manufacturing equipment companies formed an organization called the "Consortium of Semiconductor Equipment Manufacturers (CSEM)" at the end of last year and have been communicating with the government and Congress through the Washington D.C.-based law and lobbying firm Akin Gump. Akin Gump is creating a separate list of equipment with relatively lower technological levels among U.S. manufacturing equipment products that can be sold to China. This is a strategy to maintain revenue generated from China.

The Economist viewed that the success or failure of these efforts by U.S. manufacturing equipment companies depends on whether Japan and the Netherlands join the export restrictions. Since Tokyo Electron and ASML play important roles in the industry, their participation is necessary to achieve the U.S. government's goal of curbing China's semiconductor rise. The Economist added, "Hardliners in the U.S. will try to impose stronger restrictions."

This content was produced with the assistance of AI translation services.