BEIJING (BLOOMBERG) - China's top flash memory chipmaker sees no easy way to replace US chipmaking gear, underscoring how a further crackdown on the supply of American technology will devastate the local semiconductor industry.
Yangtze Memory Technologies gets over 80 per cent of its equipment from the US and Japan now, said Zheng Jiuli, vice president in charge of supply chain management. While some Chinese suppliers have made breakthroughs in areas including etching, cleaning and coating, there aren't enough local alternatives to replace everything, he added.
"Long-term investments in innovation and R&D have led to technological advantages" at US and Japanese suppliers, MR Zheng said. "This is also the reason why their products are currently in the mainstream and are difficult to replace."
The deficit of basic chipmaking equipment complicates Beijing's ambitions to reduce its reliance on its geopolitical rival. China has rolled out a number of measures to boost its domestic chip industry, including creating a US$29 billion (S$39.7 billion) semiconductor investment fund and Beijing is planning to provide broad support for so-called third-generation semiconductors in its next five-year plan, Bloomberg News reported last week. The manufacturing of these chipsets, which are mainly made of materials such as silicon carbide and gallium nitride, only has limited exposure to US vendors, analysts at Citigroup have said.
Yangtze Memory hasn't set a target for domestic procurement, Mr Zheng said, adding that it would be "unscientific" to do so. The company operates a US$22 billion facility in Wuhan that's by far China's most advanced factory for 3D Nand, the latest iteration of storage used in smartphones and high-end computing.
China's giant chip industry is bracing for further Trump sanctions. Efforts by the White House to constrain the rise of China's tech giants have already led to bans on exports of US technologies and equipment to Huawei Technologies, the largest Chinese maker of handsets and 5G networking gear.
China has a long way to go before it can even begin to threaten America's dominance of the global semiconductor industry, Zhao Weiguo, chairman of Yangtze Memory parent Tsinghua Unigroup, said last year. Unigroup and other Tsinghua affiliates have pulled off a number of acquisitions over the years, including of RDA Microelectronics and Spreadtrum Communications, to beef up their design capability, and signed partnership deals with global players including Western Digital.