As the United States tightens the reins on exports of advanced semiconductor equipment to China, analysts say expansion of capital spending by Chinese semiconductor corporations such as CXMT (ChangXin Memory Technologies) will be put on hold. The Chinese government, anticipating U.S. export controls, is going all out to localize semiconductor equipment, but the dominant view is that new capacity additions will be limited under restrictions on advanced semiconductor equipment.
According to the industry on the 21st, CXMT's current DRAM production capacity stands at about 280,000 wafers per month and is expected to expand to around 300,000 next year. That contrasts with Samsung Electronics and SK hynix, which are making large-scale facility investments on the back of growth in the artificial intelligence (AI) industry.
A semiconductor equipment industry official said, "CXMT's new DRAM investment will be limited to expanding current production capacity by around 10%, and the strengthening of U.S. export controls is cited as a factor restricting capacity expansion."
The Chinese government recognizes the situation and is speeding up localization of semiconductor equipment. It plans to invest most of the roughly 344 billion yuan (about 71 trillion won) third-phase semiconductor investment fund in Chinese semiconductor equipment corporations. China is stepping up technology development centered on corporations receiving massive government support, such as Naura Technology, AMEC, and SMEE. However, because it is not easy to replace advanced semiconductor equipment in a short period, analysts say capacity expansion will be constrained through next year.
Cha Yong-ho, an LS Securities researcher, said, "CXMT's capacity expansion is being limited by the strengthening of U.S. export controls. China recognizes this, and the third-phase investment fund is being concentrated on semiconductor equipment," adding, "If China succeeds in localizing equipment next year, expansions including CXMT's new Shanghai plant will resume from 2027."
Meanwhile, with the U.S. government expected to move to regulate Chinese semiconductor equipment corporations, some say it could hinder industry growth. On the 20th (local time), Reuters reported that Republican and Democratic lawmakers introduced a bill to ban corporations receiving subsidies under the CHIPS Act from purchasing Chinese-made equipment for 10 years. However, the bill includes a provision allowing government-level exceptions for equipment not produced in the United States or allied countries. Given that lawmakers from both parties jointly introduced the bill, it is expected to pass smoothly.
Currently, not only domestic corporations such as Samsung Electronics and SK hynix but also many overseas semiconductor corporations including TSMC, Intel, and Micron are receiving subsidies under the U.S. CHIPS Act. Most semiconductor manufacturing corporations use relatively inexpensive Chinese semiconductor equipment in various processes other than advanced semiconductor equipment. If the bill passes, Chinese semiconductor equipment corporations will see slower sales growth, making it difficult to secure expense for investment in research and development (R&D), and they will inevitably face difficulties in technology development through collaboration with semiconductor manufacturing corporations.
A semiconductor industry official said, "It is true that most semiconductor manufacturing corporations use relatively inexpensive Chinese semiconductor equipment," adding, "If regulations on semiconductor equipment corporations expand, sales will be hit. Even if they can use it at production lines located outside the United States, from the perspective of semiconductor manufacturing corporations, they cannot help but hesitate to pursue collaboration with equipment corporations that face import restrictions."