CPPCC delegates propose plans for semiconductor self-sufficiency

Delegates to the Chinese People's Political Consultative Conference (CPPCC) have been formulating proposals to promote China's self-sufficiency in semiconductors and counter the U.S. strategy of tech containment that threatens the domestic chip sector’s survival. Xie Shanghua, Deputy Chairman of the Sichuan PPCC proposed that the NPC enacts a law similar to the U.S. CHIPS and Science Act that came into effect in August last year. This would enable China to pull together resources for breakthroughs in chip technology and production of advanced semiconductors. The law would require China's IC industry to focus on the development of advanced 7-nanometer, 5-nm, and 3-nm processes, as well as chip software tools such for electronic design automation. These process nodes and software, however, are mostly based on U.S. technologies, which Chinese firms cannot access under present trade restrictions. Wang Shengyang, a Shanghai PPCC delegate suggested the appointment of “semiconductor supply chain chieftains” for the IC industry. In addition, Wang proposed that China roll out financial support for major segments of the country’s IC sector, much like the subsidies which were provided to manufacturers of new energy vehicles (NEVs).

The Dutch government’s plan to restrict exports of semiconductor technology to China over security concerns hinders China’s drive to make advanced integrated circuits (ICs), but leaves room for the country to continue legacy chip production, according to industry insiders. That move followed a reported agreement between the United States, Japan and the Netherlands in January to restrict exports of certain advanced chip-making equipment to China, creating a powerful alliance that will undercut China’s ambitions to build up the country’s domestic chip capabilities. The restrictions could include “the TWINSCAN NXT:2000i and subsequent immersion systems”, referring to ASML’s latest ArF Immersion deep ultraviolet (DUV) lithography line launched in the third quarter last year. ASML’s latest DUV system can enable sub-3-nanometer chip-making processes with significantly improved overlay performance, enabling productivity of up 295 wafers per hour.

ASML, the world’s dominant supplier of lithography systems to chip makers, has been barred from selling its most advanced extreme ultraviolet (EUV) lithography equipment to China since 2019. The Dutch government’s new trade restrictions will be introduced before the summer. China’s IC production using legacy process nodes will not be affected.

China's semiconductor-manufacturing industry is largely focused on mature processes, while the U.S., Taiwan, Japan and some EU countries are moving to advanced processes below 10-nm. U.S. restrictions aim to cap China’s advanced logic chip-making capabilities at 14-nm, DRAM chips at 18-nm and 3D NAND chips at 128 layers.

Chinese semiconductor companies are already scrambling to stockpile chip-making equipment, spare parts and other related materials, while overseas suppliers continue to fulfill orders as they await more details on the scope of trade restrictions. Other semiconductor-related proposals focused on how the education sector can help meet the demand of Chinese chip firms for highly skilled talent. CPPCC delegate Liu Zhongfan, a staff member at the Chinese Academy of Sciences (CAS), suggested the creation of specialized IC colleges to narrow the huge gap in terms of “high-end talent” in the local chip industry. Liu also suggested that China should avoid a “great leap forward in chip-making” or “low-level disorderly competition”. Instead, the country should develop “dragon head” players to help advance the local chip sector’s international competitiveness.

President Xi Jinping accused the U.S. of leading other Western nations to suppress China’s progress. This U.S.-led “containment, encirclement and suppression” has severely challenged China’s development, Xi said, as reported by the South China Morning Post.