By Li Panpan
There are reports that the US government is likely to suspend the supply of photoresists by suppliers like DuPont to China, implying a new impediment to China’s rise in semiconductor manufacturing. A JW Insights article noted that the possible damage might be limited because the majority of the current supplies to China come from Japan and DuPont’s products are more for higher-end manufacturing in which China still has limited capacity. On the other hand, the possible US move could provide essential market space for local products and increases local companies’ share prices,
There is gossip in China’s leading wafer fab community, saying DuPont from the US began preparing to suspend the supply to Chinese companies of ArF photoresist and high-end KrF photoresist for medium and high process processes.
If there is a supply risk, the main impact will be on the process below 14nm, the DRAM process below 18nm, and the NADN process above 128 layers, all of which are essential investment directions for China in the next few years.
A Zhongtai Securities electronics industry analyst said that Chinese fabs have stocked up materials in advance, and there won’t be a total shock to the industry under the possible US sanctions with multiple supply resources in place.
JW Insights learned that Japanese companies dominate the current global semiconductor material supply chain, especially in photoresists. The combined share of Japanese companies JSR and Shin-Etsu Chemical reaches 90%. Japanese companies and DuPont are the leading players in high-resolution KrF and ArF photoresists, with the supply by local Chinese companies of KrF photoresists less than 5%, and almost none in ArF photoresists.
A Minsheng Securities analyst believes that it is not difficult for Japanese manufacturers to fill the gap caused by DuPont’s cut-off, so the impact on Chinese fabs in the short term is minimal. Many Japanese photoresist products use unique formulas, basically not subject to EAR control set by the US.
Another industry analyst said that there are many photoresist alternatives, so sanctions on photoresists will not impact Chinese players as much as those sanctions on semiconductor equipment. What’s more, Chinese fabs mainly have mature process nodes of 28nm and above, with more demand for low-end photoresists that the local suppliers can meet.
With risks from the sanctions, Chinese fabs are still stepping up stocking and accelerating verification to introduce China-produced photoresists. An executive of a major Chinese photoresist R&D firm said that it would take only a few months, not the regular two to three years, to introduce qualified products into production under the current market needs, because of more tolerance and opportunities for trial and error from fabs, creating more chances for the Chinese photoresist companies.
Chinese semiconductor photoresist suppliers mainly include Jingrui Chem(晶瑞电材), Red Avenue(彤程新材), Shanghai Sinyang(上海新阳), and Nata Chem(南大光电). Their products are more in the low-end g/i line market, while KrF and ArF photoresists are still in the technology and market development stage.
Benefiting from the rapid growth of photoresist market demand driven by the expansion of Chinese fabs, Chinese photoresist manufacturers will further increase their market shares, said the JW Insights report.
Therefore, the share prices of China’s A-share listed photoresist companies increased a lot, some even hitting the daily limit, with the news of possible supply risks from DuPont. And those listed companies’ performance reports or forecasts for the first three quarters are pleasing, with Nata Chem’s net profits up from 61.3% to 77.43%, taking the lead.
The US sanctions will hurt Chinese semiconductor companies in the short term. However, in the long run, it provides a vitally important market space for China-produced products and an imperative for upstream and downstream Chinese enterprises in the semiconductor industry to work more closely together, concludes the JW Insights article.
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