Chen Nanxiang has been the top official of the Association of the Semiconductor Industry of China (AISC) for the past few days. This executive is the CEO of Yangtze Memory Technologies Corp (YMTC), a company founded by the Tsinghua Unigroup conglomerate in 2016 with the aim of competing in the NAND chip market with the three big companies that currently dominate it: the South Korean companies Samsung and SK Hynix, and the American company Micron.
In just seven years YMTC has managed to gain a foothold in the semiconductor industry and consolidate a workforce of some 8,000 employees. During this time, Chen Nanxiang has earned himself a remarkable reputation. Together with Simon Yang, his predecessor in the position he holds, he is the person most responsible for a strategy that in less than a decade has led the company he heads to become the most important memory chip manufacturer in China. There is no doubt that his pre-eminence has helped him to gain control of China’s main integrated circuit association.
It’s not what Nanxiang says that matters; it’s the timing of what he says.
Nanxiang’s arrival as head of China’s Semiconductor Industry has come at a very sensitive time. The US and its allies have markedly increased pressure on Chinese chipmakers from the instant they suspected that SMIC had used ASML’s deep ultraviolet lithography (UVP) equipment to manufacture the Kirin 9000S SoC in Huawei’s Mate 60 Pro using 7 nm multi-patterning lithography.
A new US sanctions package will come into force on November 16 that will prevent ASML, the Dutch company that dominates the lithography equipment manufacturing industry, from selling to its Chinese customers a number of UVP machines that it has so far been able to deliver to them. Chinese chipmakers will henceforth be unable to obtain the extreme ultraviolet (UVE) and UVP lithography equipment needed to manufacture state-of-the-art integrated circuits.
In his first remarks as AISC president Chen Nanxiang has described the major challenges facing the Chinese IC industry as a result of the sanctions imposed by the US and its allies. He also argued that “the unprecedented upheaval” to which this organization is being subjected represents a great opportunity to develop locally. Everything he said was predictable and is part of the reasonable discourse that someone in his position can cling to. What is interesting, however, is that he emphasized the need for Chinese chipmakers to walk together.
His message comes at a critical time and shortly after Peter Wennink, the CEO of ASML, and Jensen Huang, the CEO of NVIDIA, have persuaded the US government of something obvious: sanctions are accelerating the development of China’s semiconductor manufacturing technology. They are accelerating its independence. In this context, what Chen Nanxiang has done is a full-fledged declaration of intent.
It is clear that the US administration will not be caught off guard by his words, but it is also clear that China’s only way out is to develop its technology sufficiently to be able to manufacture cutting-edge integrated circuits as quickly as possible without depending on foreign innovations. This is not going to be easy. Developing UVE lithography equipment is extremely complex, but China is on it. The question is not whether it will succeed in getting these machines up to speed; the interesting thing is to predict when it will be able to get them.