As the U.S. government is gearing up to put even stricter constraints on the Chinese semiconductor sector, China-based chipmakers are accelerating their purchases of wafer fab equipment (WFE) to ensure the continuous operation of their fabs. However, Chinese companies prefer to keep these transactions under the radar as some violate U.S. sanctions, reports DigiTimes.
Companies like SMIC, HuaHong, Nexchip, and Silan Microelectronics are buying everything they can, including second-hand tools, according to the story that cites anonymous industrial sources. Some of the WFE they procure cannot be shipped to China as this would violate the U.S.-imposed sanctions, which is precisely the reason why parties prefer to keep such purchases low profile.
Interestingly, even Huawei — which is under severe sanctions by the U.S. government and legally cannot procure anything containing advanced U.S. technology without permission — is stepping up purchasing wafer fab tools. Perhaps, as it is prepping to build a fab with SMIC, it wants to get as many tools as possible.
Chinese companies cannot procure tools for making 14nm-class chips and those using more advanced fabrication technologies. Meanwhile, only SMIC can produce chips on such sophisticated nodes, so for most Chinese chipmakers, existing restrictions aren't as dire. Yet, the U.S. government is working with its peers in Japan and the Netherlands to put even stricter curbs on Chinese semiconductor makers. This is why foundries and integrated design manufacturers are accelerating their orderings.
At this point, nobody knows what kind of wafer fab equipment the U.S. government wants to ban from exporting to China. As a result, Chinese foundries and IDMs seem to buy virtually everything that can be useful for their expansion and/or maintaining their current operations.
For SMIC, it is essential to purchase both advanced and mature tools as it produces chips using a wide variety of manufacturing processes. For companies like HuaHong and Nexchip — which specialize in mature production technologies — getting even outdated and/or used equipment is a must to keep their fabs running.
Among the beneficiaries of stricter sanctions against Chinese semiconductor companies will be Taiwanese makers of fab equipment, the report says. Some already see orders from China extended until 2024 and even 2025.