Compared with the same period last year, exports of South Korean microchip equipment to the Middle Kingdom in the first half of the year fell by 51.89%.Experts do not rule out the possibility that sales will continue to fall, and at the initiative of China itself.Image source: L N/unsplash.comAccording to the Korean Customs Service, released on August 9, total exports of semiconductor equipment to China amounted to $694.8 million in the first half of the year - a 51.89% decrease compared with the first half of 2021.According to Business Korea magazine, China is the most important market for South Korean producers of the equipment, which accounted for 60% of South Korea's exports of the relevant \"tools\", primarily sent to Samsung Electronics and SK hynix plants located in China.In addition, Chinese companies such as YMTC, CXMT and SMIC are considering to buy South Korean solutions for the semiconductor industry in response to supply restrictions by the U.S.Experts explain the drop in exports by increasing Chinese investment in its own semiconductor industry amid growing pressure from the United States.Industry sources suggest that exports may drop even more due to Korea's joining the Chip 4 alliance, which consists mostly of states unfriendly to China.It is expected that Chinese authorities themselves may limit export of equipment to South Korean memory chip plants in China by encouraging Chinese enterprises to stop using South Korean equipment for development and production of the equipment in the country itself.We know that the U.S.has already introduced restrictions on cooperation with the Celestial Empire in the semiconductor industry, limiting inter alia access to subsidies for manufacturers planning to develop semiconductor production in the PRC.China itself has initiated criminal proceedings against officials responsible for import substitution in the semiconductor industry - it remains to be seen how effectively the allocated funds were used.
ASML shares fell due to rumors that the U.S.is trying to cut off its supplies to China - shares of Chinese chipmakers on the contrary jumped
After the recent publication of Bloomberg about the pressure on the lithography equipment manufacturer ASML from the U.S.authorities in order to cut off supplies to China, the company's shares immediately went down in price.Paradoxically, the shares of Chinese semiconductor manufacturers after that began to rise in price.Image source: Laura Ockel/unsplash.comThe Dutch ASML, which is the largest supplier of advanced lithography equipment for chip production, some time ago already prohibited to supply its most advanced tools to China.Nevertheless, Bloomberg reported on a possible complete ban on supplies, including mature process machines.The source cited \"people familiar with the issue.\" ASML itself refused to comment on the rumors.After the publication Bloomberg share price ASML plummeted by 7.2%.Valuations fell cheaper and securities of other equipment manufacturers for chip makers - the company Lam Research by 3.6% and Applied Materials by 2.4%.Refusal to sell to China may be extremely unprofitable for the ASML - in 2021 about 16% of its sales accounted to the Celestial Empire for 2.1 billion euros.Each sold machine is worth hundreds of millions of dollars.At the same time, an export license is required to supply such tools.Since 2019, the Dutch government, under an agreement with the United States, denies ASML export licenses for sales of the most advanced machines for EUV lithography in the Middle Kingdom.Only less advanced DUV variants have been sold there.That said, most chips are still produced using DUV lithography and limiting sales of the machines in question could have a devastating effect on the Chinese semiconductor industry, with it likely exacerbating the global semiconductor deficit.In 2021, the US National Security Commission on Artificial Intelligence, chaired by former Google head Eric Schmidt, recommended that the US State Department and Commerce Department pressure allies with Securities for various Chinese chip makers rose 10 percent or more.China's chip manufacturing industry is growing faster than anywhere else in the world, and after the U.S.imposed sanctions on giants like Huawei and Hikvision, demand for locally made components only increased.According to Chinese industry representatives, prices are rising on expectations of import substitution by Chinese companies of foreign solutions.The share price in the Chinese segment was also fueled by preliminary, extremely optimistic data on the revenues of local Advanced Micro-Fabrication, which produces equipment for semiconductor production.In addition, fears that chipmaker revenues would be too low due to pandemic restrictions have not materialized to the extent expected.Finally, there is still no reliable data on the discontinuation of ASML sales.
U.S.: Attempts to buy counterfeit chips amid component shortages lead to increased fraud activity
According to ERAI Inc, an American company that tracks counterfeit chip shipments and industry fraud, the semiconductor shortage has led to a record number of fraudulent transfers of funds to sham contractors by U.S.customers.Image source: Brian Kostiuk/unsplash.ERAI reports that in 2021 there were 101 reported incidents of wire transfer fraud, compared to 70 incidents in 2020 and just 17 five years ago.According to ERAI President Mark Snider, companies are desperate to find chips not available from authorized and trusted distributors, so they turn to so-called \"shady brokers\" who they transfer money to, often without receiving any products in return.It is alleged that all reported fraud cases involve Chinese brokers, reports to ERAI are made on a voluntary basis.Although there is a counterfeit parts database GIDEP and the Government-Industry Data Exchange Program in the United States, anonymous appeals to government agencies are not allowed, so the ERAI database has become the main for companies wishing to learn more about problems with counterfeit purchases or report on problems that have already occurred.The latest data show the number of incidents with counterfeit chips, information about which is not available to the public.That's much lower than the 963 incidents reported in 2019.Snyder said it is possible that quarantine measures related to the pandemic have made it more difficult for counterfeit suppliers to do business in such an environment.The findings were made public at the Center for Advanced Life Cycle Engineering's Symposium on Counterfeit Parts and Materials, organized by the University of Maryland (USA) and industry group SMTA.According to experts, the actual number of incidents may be much higher, because many companies are afraid of reputational damage and prefer not to report attempts to purchase counterfeit chips at all.
TSMC will build four new plants to produce 3nm chips - each costing $10 billion
TSMC will build four new plants to produce 3nm chips.It was reported by Nikkei Asia.The total investment will be about $40 billion.The new factories will strengthen Taiwan's dominance in chip production.Today, according to various estimates, the island produces up to 90% of advanced semiconductor products.Source: Taiwan Semiconductor Manufacturing Co.Despite the recent completion of four factories, TSMC continues to expand production.Presumably, the new facilities will be located near the Taiwan city of Tainan.The cost of each facility will be about $10 billion.The potential volume of production is not specified yet.U.S.politicians believe that the over-reliance on Taiwan chips creates risks for the global supply chain.Because of this, U.S.President Joe Biden signed an order to strengthen the U.S.industry in the field of semiconductors.The authorities also turned to Taiwanese companies with a proposal to build plants on the U.S.territory.The same TSMC is quite actively conducting construction of its enterprise in Arizona, where it will launch 5-nm products.A few days earlier, TSMC announced five 3-nm technologies for the production of chips.According to the developers, the novelties will increase the frequency of processors by 10-15% at the same power consumption, and at the same frequency - to reduce energy costs by 20-30%.
Chinese automakers complained of chip costs rising more than 100-fold
As the global chip shortage continues to persist, it is also affecting car production in China.Local automakers are seeing multiple times the cost of semiconductors.Image source: XPengIn a recent speech, XPeng CEO He Xiaopeng complained that the cost of chips has increased by more than 100 times due to likely price manipulation.According to Digitimes, the information was confirmed by Richard Yu, head of Huawei Consumer Business Group and Intelligent Automotive Solution BU.According to his words in automobile industry the chips earlier costing about $1.5-2.99 have grown in price up to about $375.According to AFS analysts, only in May 1.69 million fewer cars were produced in the world because of chip deficit.Because of the imbalance of supply and demand, some vendors are attempting to manipulate prices.In particular, Bosch is rumored to be negotiating a price hike for car chips, and industry experts warn that other industry players may follow suit.As prices for minerals used in traction batteries also continue to rise, some Chinese automakers have already raised prices for their cars in 2022.At the same time, WM Motor head Freeman Shen (Freeman Shen) said that car chip prices have also risen and now the cost of car semiconductors exceeds the cost of traction batteries.Although vehicle production in China has slowed due to the COVID-19 outbreak, demand for car chips should remain high in the medium to long term.As a result, the world's leading semiconductor manufacturers are planning to expand their capacity.For example, Infineon has declared its intention to invest in numerous large projects of the corresponding orientation.Meanwhile, China is trying to ensure its independence from chip supplies, but many experts believe that the country has yet to obtain in one way or another some key technologies for their production.As the world's largest car market, China is particularly short of the semiconductors needed to produce cars.Nevertheless, 95% of the total volume of relevant products come from abroad.So far, according to experts, the country has no companies capable of offering products with stable characteristics, so the Celestial Empire still continues to rely on imported components.
TSMC will build plants in the U.S.and Japan, but not yet in Europe
The largest manufacturer of semiconductor products - Taiwan Semiconductor Manufacturing Co (TSMC) today announced that there are no definite plans to build plants in Europe.The information came amid repeated attempts by the EU to attract Taiwanese companies to manufacture semiconductors in the European region.Image source: Brian Kostiuk/pixabay.comWith many industries suffering from chip shortages around the world, Taiwan and the EU held talks last week about cooperation, one of the key points of which was the possibility of interaction in the semiconductor market.In February, the EU introduced the so-called European Chips Act, which lists Taiwan as one of the \"like-minded partners\" with whom Europe would like to cooperate.TSMC, the world's largest contract chip maker and Asia's most valuable publicly traded company, said a year ago that it was engaged in an initial assessment of expansion into Germany, but there has been no real progress so far.\"We have relatively fewer customers in Europe, but we're still evaluating and still don't have concrete plans,\" company chairman Mark Liu said at the annual shareholder meeting.It is known that TSMC has allocated $12 billion to build factories in the United States and is building a joint site with Sony Group in Japan -- they should help neutralize a global chip shortage.It has already noted that the plants in the U.S.will cost the company a little more expensive than expected.Additionally, TSMC said that this year the company's revenue should grow by about 30%, which contributes to the ongoing chip shortages and rising prices for semiconductors.
Chip shortages are waning and that's bad news for Asian economies
Chip makers and other electronics component suppliers have enjoyed huge profits over the past couple of years due to strong demand for their products.Nevertheless, the changing global economic environment could have a negative impact on both the performance of semiconductor suppliers themselves and the members of their supply chains.Image source: Alexandre Debiève/unsplash.comThe Wall Street Journal reports that a slowdown in the Chinese economy and economic fluctuations in the American technology sector will reduce demand for electronics from both consumers and corporate clients.Shipments of smartphones and computers have already begun to decline.Thus, according to IDC, in the first quarter of 2022 shipments fell by 8.9% compared with the first quarter of last year, and the supply of computers for the same period decreased by 5.1%.In general, the world as the pandemic restrictions are lifted customer interest is shifting from buying goods to services.The situation is exacerbated by the economic crisis and ongoing COVID-19 outbreaks in China.In the Celestial Empire, smartphone sales fell 14.1% in the first quarter.Across the Pacific, the drop in U.S.tech stocks has reduced demand for IT equipment, and previously wasteful IT businesses are forced to tighten their belts.For example, server chips for data centers were an important factor in the growth of the semiconductor industry for a couple of years, but spending cuts by technology companies could seriously change the situation.Although the shortage of semiconductors, which lasted more than 18 months, recently becomes less acute.The decline in demand could have a negative impact on companies that have accumulated large inventories of electronic components.East Asia, where most suppliers are located, could feel the negative effects of the drop in chip orders.Sanitary restrictions in Shanghai and other Chinese cities due to the COVID-19 outbreak are known to have caused a drop in supply and demand not only in mainland China itself, but also in neighboring economies - Taiwan and South Korea.Image source: Alexandre Debiève/unsplash.comSouth Korean exports rose slightly in May compared to the same month last year, but only because there were fewer working days in May in 2021.In contrast, exports of semiconductors and display panels fell compared to April, according to Morgan Stanley.The lifting of sanitary restrictions in Chinese cities may lead to short-term growth, but serious changes are not expected until at least early 2023.The situation is very complicated.Giants like TSMC are likely to be less affected due to their dominant market position, but smaller Asian businesses are likely to face tough times.
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