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China will not be able to abandon imported equipment in the next ten years

The Chinese company SMIC was expecting the imposition of sanctions from the United States, so in the second quarter, it increased purchases of Japanese lithographic equipment. This does not fully solve the problem, but it shows the desire of the leading Chinese manufacturer to maintain the pace of development even in the face of increased sanctions restrictions.

Morningstar Equity Research, quoted by CNBC, claims that SMIC and other Chinese semiconductor manufacturers will inevitably suffer from US sanctions over the next three years. They will not be able to completely get rid of “American dependence” even in the next ten years, according to the primary source.

Recall that SMIC is already preparing to launch a production line as an experiment, which will produce 40-nm products without the use of American equipment. In three years, she plans to repeat the experiment with the development of 28-nm technology. Relying solely on Japanese suppliers in this situation would not be correct, since they also use American technologies, and therefore will be forced to obey the US ban on cooperation with SMIC.

Independent Strategy officials told CNBC that China's response to sanctions against SMIC and its entire national semiconductor industry will be measured. The Chinese authorities should not retaliate against their own economy. The business of the American companies operating in the PRC may suffer. The initiative is still on the US side, as it has exacerbated tensions over Huawei's crackdown on Chinese mobile app developers (TikTok and WeChat) and has now added problems to SMIC. The Chinese side all this time-limited itself to publicly censuring US behavior but did not rush to introduce “mirror and proportional” responses.

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