Nikkei reported on October 12 to analyze whether the US government’s export restrictions will make China’s semiconductor industry in trouble. He pointed out that, in the long run, the United States’ “no-grain attack” on technology may actually help China’s semiconductor industry to become more independent and stronger.

U.S. sanctions restricted the supply of semiconductors, semiconductor manufacturing equipment, and design software from companies such as Huawei and semiconductor contract manufacturer Semiconductor Manufacturing International Corporation, leading many related companies around the world to cease business with these two companies at the end of September.

However, this does not mean that there is no detour. The report shows that there are more than 1,000 emerging semiconductor-related companies in China. If Huawei and SMIC can purchase semiconductor chips, design software and manufacturing equipment imported by these companies, they will be able to effectively purchase semiconductors and expand their manufacturing facilities.

Art Dejias, chairman of Synopsys, a large US semiconductor design automation software company, said, “In addition to Huawei, some semiconductor-related companies have purchased a lot of design software in China.” Synopsys is a company that continues to perform well. The resale of software in China is hard to deny.

Taiwan’s largest fabless semiconductor company MediaTek Inc. has very few sales to the United States. Although it has ceased its business dealings with Huawei, there is a rumor that it may accept orders from Huawei in preparation for US sanctions. It is believed that MediaTek can place manufacturing orders without revealing the details of end users, and Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest semiconductor contract manufacturer, may also accept orders.

There are still doubts about the effect of export restrictions in the short term. Moreover, it is even more uncertain whether the United States, Japan and Europe can maintain their advantages in semiconductor technology in the medium and long term through trade controls. The number of transistors on a semiconductor chip will double in 18 months to two years, and the so-called “Moore’s Law” is being fundamentally replaced by a new generation of technology. This kind of technological transition between generations may shake the advantages of the previous generation of technology, and this may provide an opportunity for Chinese semiconductor laggards to catch up.

In the past, higher integration was achieved by “miniaturizing” the circuit line widths distributed on the silicon substrate plane. However, since the line width dropped to 35 nanometers (one nanometer equals one billionth of a meter) in the second half of the 2000s, the pace of miniaturization has been slowing down due to technical difficulties.

This is why three-dimensional technology increases the number of components per chip by stacking components vertically or layering the circuit surface itself instead of miniaturizing it on a flat surface. This approach will become the mainstream of continuation of Moore’s Law.

Stereoscopic technology has become the standard for flash memory, such as photo storage in smart phones. In the past, the circuit line width was once reduced to about 16 nanometers, but now it has returned to 20 to 30 nanometers, and the development of three-dimensional circuits with up to 128 layers has also made progress.

Logic semiconductors, which are the “brains” of personal computers and smart phones, and DRAM memory semiconductors, which are “workbenches” for processing and storing information, are also undergoing a transition from miniaturization to three-dimensional structures.

Stereo lithography technology has opened up a way to manufacture high-performance semiconductors without the most advanced technology. It uses extreme ultraviolet lithography (EUV) technology, which uses extremely short wavelengths in the semiconductor manufacturing process, called exposure. During the exposure process, a light beam is used to project the circuit diagram onto the substrate.

The use of EUV requires the most advanced EUV compatible equipment, including all processes including thin film deposition and cleaning, but in the case of stereolithography, a new path can be opened up by transforming equipment based on traditional precision. Of course, this may not be an easy task, but “this pass is less difficult and cost-effective than EUV. In addition, besides flash memory, stereolithography technology has not yet been established.” Semiconductor business consultant Satoshi Oyama said.

At present, ASML of the Netherlands is the only company in the world that can produce EUV lithography systems. However, most of the intellectual property rights of its basic technology are held by American companies. Therefore, the Dutch government will not allow the export of EUV lithography systems using ASML to China.

Japan’s Nikon and Canon can manufacture exposure systems other than EUV systems. According to estimates from the global network of manufacturing equipment market research companies, Nikon’s market share of EUV lithography equipment in the previous generation is 8% in 2019, and the share of the previous two generations is 35%, while Canon’s market share of EUV lithography equipment before the third generation was 26%. If Nikon expands its research and development efforts to meet the needs of stereolithography machines, it may regain market share.

An industry insider said: “We have received many quotations from Chinese companies and hope to fund the joint development of new exposure systems other than EUV.” In addition, the Chinese government has begun to earnestly pursue the development of manufacturing equipment and design software.

Yukio Sakamoto, the former president of Elpida, who was appointed by the semiconductor giant Ziguang Group as the senior vice president last fall and helped establish China’s DRAM manufacturing system, said with a smile that the company’s executives in China once said to him: “Thanks to Trump, we are now determined to develop technology independently.”

It is true that China’s national goal of increasing its semiconductor self-sufficiency rate to 70% by 2025 now seems almost impossible to achieve. However, in the long run, the US’s “no-grain attack” on technology may actually help China’s semiconductor industry to become more independent and stronger.