[Chip Talk] Despite the Broadcast of China's 'Semiconductor Rise' Drama... Increasing Import Barriers

Drama 'Ajeok Junggukshim' Airs from the 10th
Emphasizes 'Self-Reliance' Success but Challenges Grow

Chinese state-run media have been heavily promoting a drama featuring engineers who have succeeded in developing semiconductor equipment technology independently, drawing attention to the background of the story. Since September, the export of deep ultraviolet (DUV) equipment from Dutch semiconductor equipment maker ASML to China has been restricted, which is expected to deal a significant blow to the Chinese semiconductor industry as a whole. This is interpreted as an effort to showcase domestic technological capabilities and to control internal public opinion.

However, within the Chinese semiconductor industry, concerns are spreading that the US-led sanctions against China will increasingly intensify, leading to further declines in sales and isolation. In the US as well, as semiconductor imports from China sharply decrease and semiconductor companies’ revenues plummet, voices calling for both countries to quickly move away from extreme confrontation and engage in negotiations are growing.

◆ ‘Semiconductor Rise’ Drama Started on the 10th

On the 16th, Chinese local media such as Xinhua reported that since the 10th, a drama titled ‘Wo De Zhong Guo Xin (My Chinese Chip)’ has been airing on Youku, Alibaba Group’s video platform, with extensive promotion. According to local media, the drama depicts the struggles and success story of a startup engineering team that independently developed lithography equipment technology following the US ban on semiconductor equipment exports to China.

Foreign media have also shown interest in the drama. Bloomberg News noted, "Although the drama is called ‘My Chinese Chip,’ its official English title is ‘The Best Chip,’ reflecting how strongly the Chinese government is committed to independent technology development." It added, "The Chinese character ‘Xin (芯)’ at the end of the title also means ‘heart’ in Chinese. From the trailer, it clearly reflects the reality as ‘a story about the equipment sanction war against China.’" This indicates that the drama is heavily influenced by the Chinese authorities.

Previously, China has strongly emphasized self-reliance in technology development amid the US-led tightening of sanctions and restrictions on semiconductor equipment imports. President Xi Jinping personally stated the goal of "actively supporting domestic semiconductor equipment companies in response to US offensives and securing core technologies independently without relying on foreign companies’ technology."

◆ ASML’s Deep Ultraviolet (DUV) Equipment Export Restrictions Starting September

However, the reality of the Chinese semiconductor industry is worsening. The import barriers for advanced equipment from ASML, a Dutch semiconductor equipment manufacturer essential for semiconductor production, are rising.

According to CNBC, ASML announced at the end of last month that sanctions on deep ultraviolet (DUV) lithography equipment, which had previously been allowed for export to China, will begin on September 1, requiring Dutch government approval for exports to China. Earlier, the Dutch government had not specified the exact equipment or companies subject to regulation but announced that from September 1, it would require permits for some semiconductor production equipment exports to China by domestic semiconductor equipment companies.

Since the US government announced export control regulations on advanced semiconductors and equipment to China in October last year, the Netherlands and Japan have expressed their intention to join these controls starting January this year, and the scope of export restrictions is expected to gradually expand.

The Chinese Ministry of Foreign Affairs strongly criticized the US in a statement, saying, "The US has coerced other countries into joining the semiconductor suppression and encirclement against China," and urged the Netherlands "not to abuse export control measures, to effectively protect the mutual interests of companies in both countries, and to maintain the stability of the global semiconductor industry and supply chain." However, there is no effective way to break the semiconductor regulatory alliance between the US and Western countries.

◆ China’s Semiconductor Imports Plunge 18.5% in First Half of the Year… Industry Damage Expands

Although the Chinese government emphasizes self-reliance, semiconductor supply and demand for Chinese companies are becoming increasingly difficult. On the 14th, the Hong Kong South China Morning Post (SCMP) reported, citing data from China Customs, that the number of integrated circuits (ICs) imported by China in the first half of the year was 227.7 billion units, down 18.5% from 279.6 billion units in the same period last year.

The import value during the same period was $162.6 billion (approximately 207 trillion KRW), a sharp decline of 22.4% compared to the previous year. SCMP pointed out, "This trade result came amid the US strengthening restrictions on China’s access to advanced semiconductors and related equipment." Chinese electronics companies are reportedly increasingly relying on the smuggling market, where prices are more than twice as high, due to difficulties in securing advanced semiconductors.

Following the Netherlands, the Japanese government is also expected to further strengthen semiconductor equipment export restrictions, which will likely increase difficulties for Chinese companies. According to the Nihon Keizai Shimbun (Nikkei), the Japanese government plans to implement a revised law from the 23rd that adds 23 items, including advanced semiconductor manufacturing equipment, to the list of export control targets for China.

The 23 items include manufacturing equipment related to extreme ultraviolet (EUV) products and etching equipment used to stack memory elements three-dimensionally. These are essential for manufacturing semiconductor products with circuit line widths of 10 to 14 nanometers (one nanometer is one billionth of a meter) or less. As Chinese semiconductor manufacturing plants fail to accelerate securing their own technology, concerns are growing over the continued sluggishness of the Chinese semiconductor industry overall.

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