It appears that the US is taking action on two fronts in an effort to gain a competitive edge in the chip manufacturing industry. One is to try to highlight American chipmakers with billions in investment. However, the White House also believes that sticking its foot out to trip up Chinese chip makers running full sprint may allow it enough time to get its own chip capacity up to speed. It may be years before we even see a change in the market as a result of new factories.
According to a Reuters article published on Monday based on four unnamed sources with knowledge of the situation, the United States is attempting a double-leg takedown of Asian dominance in the memory chip manufacturing sector. In particular, the White House is thinking about finding a way to restrict the amount of chip manufacturing equipment that is delivered to chip makers in China.
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Although no public mention of such a ban has been made, it would essentially entail prohibiting exports of machinery built in the United States to Chinese firms that make NAND-based storage, which is crucial for SSDs and other flash storage. Chips with more than 128 layers are made using the restricted tools.
Washington has thought about kicking Chinese chipmakers in the shins before. The Biden administration reportedly believed it might target chipmaking gear heading to Semiconductor Manufacturing International Corporation, also known as China’s largest chipmaker, according to a separate Reuters report from last month based on additional unnamed individuals. The United States restricted shipments of software and equipment for chip manufacturing to the corporation while former President Donald Trump was in office. Trump was a recurring “China” foe.
According to Reuters, this will have an effect on large Chinese businesses like Yangtze Memory Technologies Company (also known as YMTC) and other significant chip manufacturers like Samsung, a South Korean company with several plants in China. Another South Korean company, SK Hynix, acquired Intel’s NAND and SSD businesses in China at the end of last year, so this could also be a setback for them.
American manufacturers Micron and Western Digital account for slightly more than 23% of the global NAND market, according to Statista. Samsung still holds a 35 percent market share worldwide, maintaining its strong position. The Biden administration has stated that it aims to eliminate “choke points” in the supply chain due to the persistent chip scarcity, which has been going on for years. Not to mention the huge $52 billion CHIPS+ measure, which recently received unanimous support from the Senate and House and only need President Joe Biden’s signature.
However, it is debatable if any of these executive initiatives, both past and present, will be sufficient to halt the Chinese chip manufacturer’s upward trend. According to recent reports, despite U.S. sanctions on Taiwan, the semiconductor giant SMIC is producing 7-nanometer circuits that are based on the designs of the huge Taiwanese rival TSMC. It simply serves to demonstrate that the United States is far from the only country capable of producing supply-side chips, and some experts believe that initiatives like the CHIPS+ law will only have a limited impact.
Since YMTC got “an estimated $24 billion in subsidies from Chinese government sources,” the United States has previously written about how it appears to be a danger to companies like Micron. However, the United States has sided with American big tech in its lawsuit against the Chinese chip-maker over their agreement to supply flash memory chips for next iPhone models. Micron is currently making every effort to remain competitive. Recently, the business touted its 232-layer NAND chips, which could produce 200TB SSDs.
