By Li Panpan
(JW Insights) Sep 11 -- Journalist René Raaijmakers, who is also the author of the book ASML's Architects, made a blunt criticism on the Western semiconductor industry in his recent article: “The Western chip industry is fat, dumb, and spoiled, and China is getting ready to flood the world with cheap chips working toward technological independence.”
Raaijmakers’s article was published on September 7 by Bits&Chips, the leading news and opinion magazine for the high-tech industry in the Netherlands and Belgium.
Below are excerpts from René Raaijmakers' article:
“If ASML's machine deliveries to China in the second quarter of this year are the first ripples of a new race in chip technology and IC manufacturing, the Western semiconductor industry may be in for quite a storm.
Semiconductor companies are among the most profitable, yet governments are pampering powerful players like Intel and TSMC with billions in subsidies. Blinded by the anti-China rhetoric from Washington, politicians and industry think the race can be won by pumping taxpayer money into nano fabs, but in doing so, they're ignoring a large part of the playing field.
While all media attention is focused on the current squeeze that China is experiencing for manufacturing the most advanced chips - again this week with Huawei's new cell phone - the country is steadily strengthening its infrastructure for mature semiconductor manufacturing. Once the machines for the 'old' chip nodes are up and running, industry competitors will start to feel the heat.
After an unparalleled three decades in which the entire world moved its electronics assembly to China, we're witnessing an era in which the country is increasingly taking charge of chip manufacturing as well. Just look at the way it's investing in knowledge and companies, and add to that a strong motivation: the desire to become independent of the US and its vassals, EU, and Japan. From this follows inexorably the conclusion that China is getting ready to flood the world with cheap chips.
It's well known that China is working toward technological independence. Leading machine suppliers are involved in China to set up an ecosystem for this purpose. Equipment builders there are already showing that they can deliver quality. They also do so at low prices. Even in lithography, the Chinese are making steady progress. I-line lithography machines from Shanghai Micro Electronics Equipment Group (SMEE) are already running at major backend players, where they help in the chip packaging process. With details of a few microns, this isn't yet the technology needed to reliably make chips, but these machines are cheap and remarkably reliable.
Meanwhile, Chinese manufacturers are steadily building fabs. They completed countless factory buildings in recent years without being able to fill them with equipment.
China's push for technological independence in chips and its response to US restrictions is very reminiscent of the Japanese initiatives of the late 1970s.
If there are lessons to be learned from this history, the current Chinese march into mature chips means that the country will flood the world with low-cost chips in the next decade. Spoiled Western chip companies will see the very comfortable margins on their products melt away and, in some cases, will close their factories. China is changing from the world's workshop into the world's chip factory. In any case, it will considerably shake up the fat, dumb, and happy chip industry.”