Text/"Autobot" Ye Li
On March 3 1 day, the same day that the Foreign Ministry of China announced the news of Japanese Foreign Minister Lin Fangzheng's visit to China (April 1 -2), the Japanese government announced that 23 categories including high-end semiconductor manufacturing equipment would be added as export control targets.
Generally speaking, the chief foreign cabinet should warm up the atmosphere before a visit, which is rare. This indicates that the Japanese Foreign Minister will come to China after three years, and there will be no public visit results.
Business lose-lose decision
The list, which came into effect in July, includes manufacturing equipment for extreme ultraviolet (EUV) related products, as well as etching equipment and consumables for three-dimensional stacking of storage elements. These products not only focus on the necessary equipment for chips below 14 nm, but also extend to 16nm and 28nm processes.
The ban will affect the exports of more than a dozen Japanese companies to China, including two core equipment manufacturers, Nikon and TEL. The former is the manufacturer of DUV in mask aligner, and the latter controls 90% of the gluing and developing equipment in the world.
In the semiconductor manufacturing industry, Japanese companies are the dominant players in the upstream. Among the 26 kinds of equipment needed for chip manufacturing, Japanese companies account for more than 50% of the market share of 10 equipment. In important front-end equipment, such as electron beam drawing equipment, coating/developing equipment, cleaning equipment, oxidation furnace, vacuum CVD equipment, etc. , the share is above 90%.
In the field of back-end equipment, Japan's dicing machine and molding machine are also the first in the world, and Japanese companies are also important suppliers of three kinds of testing equipment.
26% of TEPCO's equipment demand comes from Chinese mainland. This also means that Tokyo Electronics, which lost its 1/4 customer, is facing the same situation as American counterparts such as AMAT, Colin R&D (LAM) and Kelei Semiconductor (KLA): shrinking revenue, falling stock price and layoffs.
Tokyo Electronics lowered its expected revenue in 2023 by 250 billion yen, which seems to have made psychological preparations.
Obviously, this is a typical lose-lose decision in business.
It is a routine practice for Japan to modify the scope of export control of dual-use technologies according to the Foreign Exchange and Foreign Trade Administration Law. The export ban (which requires separate approval except for 42 friendly countries) will not mention "China", but the actual goal is clear.
There are probably two reasons for this action: first, it controls the chip manufacturing that the industry pays more attention to, which is the key link of the current Sino-US game; Second, Japan's move is to implement the understanding of "export restrictions to China" reached by "the United States, Japan and the Netherlands" in Washington on June 27, 65438.
It's not surprising that Japan chose the border station, but it is determined to implement it as soon as possible without any discount, at the expense of the commercial interests of domestic enterprises, and there are some things to watch.
At least, Japan's profit and loss assessment not only focuses on the immediate commercial interests, but also considers that it is in its long-term interests to comply with the will of the United States and curb the localization process of China's chip manufacturing.
Even if it is limited to the commercial level, Japan may have assessed the impact. An official of Japan's Ministry of Economy, Trade and Industry said: "Export control is not targeted at areas with large market size and has limited impact on corporate performance."
Whether the market accounting for 1/4 is a "large-scale market" is a matter of opinion. However, Japan must rebuild some downstream demand by itself, and the hedging measures actually taken by Japanese companies also prove that Japanese companies are not indifferent to the disappearance of this part of demand.
Tokyo Electronics decided to invest 1 trillion yen (about 7.3 billion US dollars) to implement technological innovation from 2023, with the aim of more targeting "the demand for digital communication traffic such as video and metauniverse"-President of Tokyo Electronics and Helishu said.
He hinted that Japanese companies will lay out more downstream and be close to the final demand side, instead of integrating upstream as they are now. The problem is that the downstream market was fiercely competitive as early as 20 years ago, and how to return is a problem.
This ban is subordinate to the strategic interests of the United States.
The U.S. chip export restrictions to China started from limiting Huawei's demand, and gradually expanded to all high-tech needs, naturally including the demand for corresponding chips in the automobile industry. China's countermeasures must be to strengthen domestic substitution, develop its own chip manufacturing industry and strengthen supply chain security.
The United States, on the other hand, aims at the domestic substitution process in China, starting from the upstream supply. This time, the relevant measures taken by Japan and the Netherlands have essentially prevented the enterprises of the two countries from becoming part of the local manufacturing chain of chips in China. This in itself is a blow to China's chip manufacturing chain. The United States itself does not have a comprehensive grasp of upstream manufacturing equipment and consumables, so it is necessary to pull Japan and the Netherlands.
Now no country can make chips alone, and it must rely on a specialized international division of labor system. In fact, the United States used its right to speak in security and finance to try to separate China from this division of labor system, forcing China to build a chip production chain that should be operated normally by the cooperation of all countries.
On the premise that China can't balance American hegemony in security and finance, it is impossible to counter the United States from the source, and it can only strengthen its own response at the commercial level. That is, China has been passive at the tactical level.
Changes in demand for automotive chips
For the automobile industry, Japan's decision will not have an immediate direct impact. But now the value of automotive electronics has exceeded half of the whole vehicle value, and it may reach 70% in the future. The migration of value gives OEMs the motivation to participate in upstream investment.
Everyone can understand that after the global chip division system is destroyed, it will be difficult for the world to go back to the past, and Sino-US reconciliation will be in the foreseeable future. In recent years, the whole industry has seen the United States trying to monopolize the chip manufacturing industry, and the security of the chip supply chain has long been placed in a prominent position.
In 2020, the usage of automobile chips in China accounts for about 1/3 of the world, which is slightly higher than the production and sales of whole vehicles, but the local production is only 2.5%.
Now the situation is slightly better, and the share of domestic chips has reached 5%. Although there has been no qualitative change, China's export figures show that the total amount and value of chips imported from South Korea are declining, mainly because China enterprises have taken the lead in making breakthroughs in production capacity and yield.
In terms of automobile consumption, power chips gradually take the place of MCU. Therefore, in the industry-leading list in 2022, Infineon's automotive chip business revenue slightly surpassed NXP, a veteran automotive chip supplier, reaching 69 1 billion US dollars. Ranked 3-5 are ST (stmicroelectronics), TI (Ti), Renesas (Renesas) and ON (Anson), all of whom are old faces.
It is worth mentioning that Infineon's automobile business (46%) is less than NXP's (52%), and it can surpass the latter, which is not so much related to the surge in the use of IGBT (power semiconductor) in new energy, but rather that the MCU business is gradually weakening.
The weakening of MCU should be attributed to the increasing acceptance of computing power by core computing platforms. This trend has been discussed by autobots many times ("The valuation of Mobileye has shrunk by 2/3, should car companies reduce their business expectations for autonomous driving?" 》)。 Now the business changes of chip companies clearly point out that this is a reality, not a prospect.
The concentration of computing power puts forward more stability requirements for the demand of large computing power chips. There are not many players in this field. Qualcomm and NVIDIA are leading in intelligent cockpit and autonomous driving respectively.
China's chip+tool chain enterprises are trying to realize domestic substitution, and the Japanese decision will restrict this effort. The United States also hopes to slow down the technological upgrading of China's industries through such transnational coordination.
Domestic manufacturing equipment is difficult to replace.
Japanese restrictions on the export of chip manufacturing equipment to China will only encourage related enterprises to invest more in R&D and industrial integration, so as to take supply chain security into their own hands, which has almost become a survival instinct.
At present, we see that chip design companies, first-class suppliers and automobile companies are increasingly forming alliances to achieve vertical integration within the industry.
Domestic ic design companies such as Jiefa Technology, Ruixinwei, Xinchi and Xinqing Technology are expected to take the lead in the domestic supply chain and gain long-term growth opportunities by virtue of the rapid growth of the cockpit chip industry and the local competitive advantages of domestic manufacturers.
Horizon, CAMBRIAN and other chip design, manufacturing and tool chain integration solutions companies have also received large investments that were difficult to meet before, including multinational car companies, such as Volkswagen. In history, no big country has been dragged down by the embargo. Under the pressure of sanctions and embargoes, big countries with various resources and funds have also made similar reactions.
In 2022, Chen Jing, Ruixinwei and CAMBRIAN automobile businesses began to occupy an absolute advantage in the company. However, what is upstream of computer chip manufacturing is chip manufacturing equipment and materials. This part of the domestic substitution process is weak, which is the barrel short board in the whole chip industry chain. Japan is aiming at this short board.
The development trend of this kind of things is nothing new. After the embargo came into effect, some new enterprises began to rise. Enterprises that never get orders before, even if they get orders, will be included in the supplier list. In the past, these customers were all dishes on the plates of "US, Japan and Holland" enterprises.
Now customers don't have a dilemma, because people will stop selling soon. Enterprises with poor technology will also give opportunities now, and investment will be tilted towards startups.
The process of domestic substitution has always been painful, but it is only a matter of time as long as there is a long-term and stable demand for intellectual property rights. In this process, we have to bear the cost of declining competitiveness, unstable supply chain and degraded technology application. But I can't. This is imposed.
Previously, domestic chip investment was mainly concentrated in manufacturing. The new trend is to make equipment by yourself. From a commercial point of view, of course, the cost-effectiveness ratio is poor, but "substitution" itself does not follow the principles of cost and quality at all. It is enough to solve the "yes or no" problem, and customers are not qualified to pick and choose. The customers here are the chip manufacturers mentioned above.
Of course, the Japanese move slowed down this process, but it also abandoned the China market. Even if the embargo is lifted and normal market transactions are resumed in the future, this part of the market will not come back. By then, the technical strength of foreign-related products may still be stronger than that of China enterprises, but customers are worried.
This phenomenon has been witnessed many times in photovoltaic monocrystalline silicon, power batteries, non-oriented silicon steel and other fields. Chip manufacturing, China faces international joint strangulation. This situation is familiar to people who are a little older. God helps those who help themselves, that's all. Copyright statement This article is the original manuscript of Autobots and may not be reproduced without authorization.
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