Taiwanese media: If SMIC is included in the US Entity List, European, Japanese and Korean equipment will become the priority substitutes

According to foreign media reports, the US government is considering adding China's largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), to the Entity List. Some analysts believe that the US move is intended to cut off Huawei's possibility of transferring orders to SMIC for foundry work.

Previously, the Semiconductor Industry Association (SIA) pointed out in a report submitted to the U.S. Department of Commerce that more than 73% of U.S. chips can be replaced by products from other countries. Cutting off Huawei's access to U.S. chip shipments will not only significantly reduce the revenue of U.S. manufacturers, but will also relatively reduce the R&D budgets for reinvestment by U.S. manufacturers. As competitiveness gradually weakens, the U.S. semiconductor market share is likely to gradually decline.

In addition, the Semiconductor Industry Association (SEMI) believes that the series of measures taken by the US government since strengthening the ban on sales to Huawei have not only dealt a heavy blow to US manufacturers' business opportunities and damaged the reputation of US companies, but also allowed non-US semiconductor manufacturers such as Europe, Japan, South Korea, and Taiwan to be prioritized as substitutes for mainland Chinese manufacturers.

It is reported that mainland China has become one of the world's top three semiconductor equipment markets. In the past four years, the amount of equipment purchased by mainland China's semiconductor manufacturers has doubled, accounting for a quarter of the global market demand.

According to Taiwanese media digitimes, the latest IBS report pointed out that the semiconductor market size in mainland China is estimated to be as high as US$191.3 billion in 2020, and semiconductor products will be purchased from major suppliers such as Samsung Electronics, SK Hynix, Micron, Intel, Qualcomm, MediaTek, and TSMC. In addition, IBS predicts that in 2030, mainland Chinese manufacturers will still purchase at least 60% of semiconductor products from manufacturers in non-China and Taiwan. However, the export control bans imposed by the US Department of Commerce on Huawei, SMIC, etc. have undoubtedly weakened the competitiveness of US semiconductor manufacturers.

IBS also warned that even if "Made in China 2025" fails to achieve the goal of 70% semiconductor self-sufficiency, the US government's ban has given mainland China the impetus to accelerate its progress. By 2030 or 2035, the global competitive advantage of US semiconductor manufacturers will be difficult to maintain as in the past. The US government's actions are overdrawing US competitiveness.