Raising IC self-sufficiency increasingly difficult for China

US vendors remain dominant players in the global front-end semiconductor equipment market segment, which will be a critical factor blocking China's ambition of raising self-sufficiency for ICs, according to industry observers.

A recent VLSI Research report indicated US semiconductor equipment vendors grabbed a combined share of nearly 50% in 2019. The leading US players include Applied Materials, Lam Research and KLA-Tencor.

With US-China trade tensions escalating, China's push to raise its self-sufficiency for ICs will hit a snag, as Wasbhington's new restrictions on Chinese tech giant Huawei will block supply chain partners around the world from using US-made machinery and software to design or produce chips for Huawei or its entities, the observers indicated.

Huawei and its subsidiaries, such as HiSilicon, play a crucial role in China's aggressive pursuit of IC self-sufficiency, the observers added.

US vendors should remain dominant in the global fab tool market, given the front-end segment's high entry barrier for newcomers, the observers believe. It is unlikely the dominance of US players will be replaced by their counterparts in China and South Korea over the next five years at least, the observers said.

Pure-play foundries including TSMC and SMIC will also be prohibited from shipping chips manufactured using US-made fab tools to Huawei and its entities, when the US new export restrictions against Huawei go into effect in September, the observers noted.