U.S.’s latest EDA ban targets China’s ability to design 3nm and advanced chips

On the one hand, low-end chipmakers in China have gained better market access, while the U.S. has barred American companies from providing products to Chinese I.T. enterprises.

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Joseph P Chacko
Joseph P Chacko
Joseph P. Chacko is the publisher of Frontier India, portal publishing news and current affairs. He holds an M.B.A in International Business from the Maharishi University of Management, Iowa, USA. Twitter: @chackojoseph *views are Personal.

According to an interim final rule released by the Bureau of Industry and Security under the U.S. Department of Commerce, the U.S. government will impose export controls on four technologies, including two substrates of ultra-wide bandgap semiconductors – gallium oxide (Ga2O3) and diamonds – as well as (Electronic design automation) EDA software “specially designed for the development of integrated circuits with Gate-All-Around Field-Effect Transistor (GAAFET) structure” and Pressure Gain Combustion (PGC) Technology.

The action came as the United States stepped up its pressure on China’s semiconductor industry. Although it did not specifically mention China, it is widely interpreted as a move to obstruct China’s development of advanced semiconductors, as the specific software for GAAFET is a key technology used to design 3-nanometer and more advanced chips, which could help microchips achieve a higher frequency with lower power consumption.

Western EDA companies, including US-based Synopsys, Cadence, and Germany-based Siemens, have long dominated the Chinese market. In China, the three industrial behemoths control 77% of the market.

According to media reports, China is the world’s largest integrated circuit consumer market, absorbing almost two-thirds of global semiconductor output.

Chinese Domestic Companies Respond

On the one hand, low-end chipmakers in China have gained better market access, while the U.S. has barred American companies from providing products to Chinese I.T. enterprises. 

In addition to regulatory backing, small Chinese chipmakers now have a once-in-a-lifetime opportunity to participate and flourish in the market. 

On the other hand, Chinese chip manufacturers are increasingly conscious of the need to accelerate technology development in order to withstand the U.S. ban.

Domestic Empyrean Technology ranked fourth on the list, with a 5.9 per cent market share. On Friday, the company publicly addressed a shareholder’s concern about the U.S.’ restrictive actions. It said that its objective is to promote the self-development of China’s EDA technology in order to support the sustainable expansion of the Chinese semiconductor industry.

Semitronix Corporation, which develops semiconductor industry software and test chip products, informed investors on Monday that one of the company’s priorities is yield improvement solutions. If the embargo goes into force, the corporation might entirely switch its U.S. suppliers. According to the company, several domestic industry players have already accepted Semitronix’s products and services.

Primarius Technologies, a provider of large-scale and high-performance circuit simulation, advanced device modelling, and semiconductor parametric testing, told investors that domestic EDA firms had seen increased support from the Chinese government and society, as well as breakthroughs in financing and talent cultivation. It pledged to boost its competitiveness and become China’s leading EDA provider.

According to Tianyancha, an online company information source, China today has more than 350,000 companies working in the semiconductor sector, with 80 per cent of them established during the last five years and 30 per cent registered within the previous year.

Domestic semiconductor-related firms registered 822,000 patents, 436,000 of which were classed as innovational patents, accounting for 53% of total registered patents.

According to the poll, 34 per cent of China’s semiconductor businesses are involved in wholesale and retail, 28 per cent are engaged in scientific research and technical services, and 23 per cent are involved in information transmission, software, and I.T. services.

According to the survey, the number of registered semiconductor firms has increased year after year, with an annual growth rate of more than 30%. Last year had the most significant growth in the number of new linked companies, with over 100,000 new organisations added, representing a 56 per cent increase over 2020.

Guangdong Province in South China has the most semiconductor-related companies, with 134,000 entities accounting for 38% of the country’s total. Fujian Province in East China came in second with 39,000 semiconductor manufacturers.

The U.S. government’s stick-wielding is believed to prove disastrous for China’s semiconductor sector. However, Huawei, a Chinese 5G developer, appears to have withstood U.S. pressure. SenseTime, a US-banned Chinese military-industrial complex firm, has gone public in Hong Kong.

The U.S. – China Semi Conductor rivalry

Japan, China and South Korea are among the top six nations in terms of overall semiconductor revenue globally, owing to factors such as government assistance, large market size, and increased research investment. The Asia-Pacific area is also the world’s largest semiconductor market, accounting for 60% of total global sales, with the Chinese mainland accounting for more than 30%.

According to a 2021 Harvard Kennedy School assessment, China is on track to surpass the United States in critical 21st-century technologies such as A.I., 5G, and semiconductors within the next decade.

According to the report “The Great Rivalry: China vs the U.S. in the Twenty-First Century,” China will become the world’s top semiconductor maker in mature technology nodes during the next decade.

In addition to U.S. export limitations, the U.S. has long worked to corral Japan and South Korea with both moderate and harsh measures in order to construct a US-led “China free” semiconductor supply chain alliance in order to retain U.S. semiconductor supremacy and impede China’s chip sector’s development. The United States is exerting pressure on the Dutch government to prevent a local business, ASML, from exporting chip-making equipment to China. ASML is the world’s top supplier of lithographic equipment for chip manufacturing. It cannot, however, sell its superior EUV lithography capabilities to China, which makes semiconductors using cutting-edge manufacturing procedures.

The U.S. ban on China is unlikely to affect the sales of western companies as the worldwide semiconductor shortfall has been ongoing for more than a year, with no end in sight. 

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