On December 3, the 'Star Market Daily' (Reporter: Guo Hui) After the US Department of Commerce published a new list of export control entities, today (December 3), relevant domestic departments, technology industry associations, and leading companies in the market actively responded to external concerns, promptly assessed the impact, and considered counter strategies.

The Chinese market has become the most important application market in the global integrated circuit industry, and China is also one of the few regions in the world with active semiconductor investment capacity. Some analysts believe that the new round of US export controls is fracturing the global semiconductor market, which may also limit the development of US companies.

In fact, over the past two years, overseas semiconductor companies such as STMicroelectronics, Micron Technology, and Intel have chosen to increase their investments in the Chinese market and focus on the growth opportunities of Chinese customers. The real voices of these overseas companies are bullish on China's future growth prospects and share development opportunities.

Industry associations: Call for attention to US chip security risks.

The China Semiconductor Industry Association pointed out in its statement that the US government's arbitrary modification of trade rules has already caused substantial damage to the security and stability of the global semiconductor industry chain. As the US continues to escalate its export control measures, the backlash effects are also growing, causing disruptions in the US supply chain, rising operating costs, and affecting the stable supply of US chip products. US chip products are no longer secure or reliable.

"As the most critical defense line for information security, the security risks faced by underlying chips are often more fatal than software." This is how some senior professionals in the domestic chip industry describe it. In addition to hardware security risks in chips, the reshaping of the global semiconductor supply chain system has long elevated supply chain security to the national security level.

The China Communications Enterprise Association, the China Association of Automobile Manufacturers, and the China Internet Association today (December 3) issued a joint statement urging domestic companies to carefully consider purchasing US chips.

The China Communications Enterprise Association stated that its trust and confidence in procuring American chip products have been shaken, believing that American chip products are no longer reliable or safe. It calls on the government to conduct investigations into the security of the critical information infrastructure supply chain, take effective measures, and ensure the safe and stable operation of critical information infrastructure.

The China Association of Automobile Manufacturers declared that the automotive industry is highly globalized, and the Chinese automotive industry has always been rooted in global development. It strongly opposes the U.S. government's generalization of the concept of national security, the misuse of export control measures, and malicious blocking and suppression of China. This behavior seriously violates the laws of market economy and principles of fair competition, and disrupts the international economic and trade order. The arbitrary modification of control rules by the U.S. government has seriously affected the stable supply of American chip products, and the trust and confidence of the Chinese automotive industry in purchasing American chip products is being shaken. American automotive chip products are no longer reliable or safe.

The China Internet Association stated that to ensure the security, stability, and sustainable development of China's Internet industry, it calls on domestic enterprises to actively take countermeasures, carefully select the procurement of American chips, seek to expand cooperation with chip companies from other countries and regions, and actively use chips produced by both domestic and foreign-funded enterprises in China. Despite the U.S. neglecting the stability and security of the global supply chain, China should continue to adhere to expanding independent openness. On the basis of ensuring security, China should continue to firmly establish and maintain mutually beneficial relationships with global partners, promoting the prosperity and development of the global economy.

The Ministry of Commerce also announced today (December 3) that, in accordance with relevant provisions of the Export Control Law of the People's Republic of China and other laws and regulations, to safeguard national security and interests, fulfill international obligations such as non-proliferation, it has decided to strengthen the export control over relevant dual-use items to the United States. Effective immediately: 1. Prohibit the export of dual-use items to U.S. military users or military purposes. 2. In principle, do not permit the export of dual-use items related to gallium, germanium, antimony, superhard materials to the United States; implement stricter end-user and end-use reviews for graphite dual-use items exported to the United States.

Foreign Ministry Spokesperson Lin Jian stated at today's (December 3) regular press conference that China has solemnly lodged representations with the U.S. for its latest update on semiconductor export control rules, sanctions against Chinese companies, and malicious suppression of China's technological progress. "China has consistently and firmly opposed the U.S. generalization of the concept of national security, the abuse of export control measures, and the imposition of illegal unilateral sanctions and long-arm jurisdiction on Chinese companies. This practice seriously undermines the international economic and trade order, disrupts the stability of the global supply chain, and harms the interests of all countries. China urges the U.S. to respect the laws of market economy and the principle of fair competition, and will take necessary measures to resolutely safeguard its own security and development interests."

Institutions: Export controls may restrict the development of U.S. domestic companies.

Today (December 3), many domestic semiconductor companies have evaluated the impact of the new round of U.S. export control entity list. Most companies have indicated that, as the supply chain has been essentially localized, the overall impact is manageable.

Naura Technology Group announced this evening (December 3) that the company has noted the latest 'Entity List' published by the U.S. Department of Commerce on December 2, 2024, which includes Naura Technology Group and its ten subsidiaries. The company's production and operation are currently normal, and being listed on the 'Entity List' this time will not have a substantial impact on the company's business. The company will continue to monitor and follow up on the development of subsequent events, actively communicate with all relevant parties, and make necessary preparations.

Huadu Jiutian announced before the market today (December 3rd) that it has noted the information released by the U.S. Department of Commerce on December 2, 2024, listing the company and its related subsidiaries on the Entity List. The company is actively addressing the risks associated with being listed on the Entity List. The overall impact of being listed on the Entity List by the United States is manageable. Currently, the company's operations and financial situation are normal, with all businesses steadily advancing. The company will seize the development opportunities and accelerate the domestication process of the entire EDA tool chain.

Today (December 3rd), Tuojing Technology stated in its investor relations activity records that although the company and its related subsidiaries have been included in the new round of the U.S. Entity List, this event will not have a substantial impact on its daily operations. It has established a stable supply chain system to ensure the security and integrity of its operations. Currently, all businesses of the company are steadily advancing, and its operational and financial conditions are normal.

The research report released today (December 3rd) by the Ping An Securities analyst team led by Fu Qiang points out that the new round of U.S. export control Entity List will further divide the global semiconductor market and push the domestication process of the domestic ICT industry.

On one hand, due to the large investment and high risks involved in semiconductors, the globalization of the supply chain can reduce investment pressure on individual countries and regions, diversify risks, and leverage their respective comparative advantages to avoid reinventing the wheel. Only then can the industry achieve a more benign development. The "small courtyard high wall" policy will cause the fragmentation of the globalized industrial chain. On the other hand, China is already an important global semiconductor product and equipment market. U.S. companies such as AMAT, LAM Research, and Synopsys are deeply involved, and at the same time, China is also one of the few regions in the world with active investment in semiconductor production capacity. Restricting exports to China may also limit the development of U.S. companies.

Overseas semiconductor giants: Multiple expansions into the Chinese market

Currently, the Chinese market has become the most important application market for the integrated circuit industry globally. China is the world's largest automobile producer and consumer, as well as the largest single smart phone market globally. Correspondingly, the upstream core industry chain is also experiencing accelerated growth.

In the chip design segment, according to a recent research report by Bocom International, the compound annual growth rate of the Chinese integrated circuit design industry from 2023 to 2032 is expected to reach 9.8%, exceeding the global integrated circuit market's compound growth rate of 8.5% during the same period. It is also predicted that China's integrated circuit design industry self-sufficiency rate will increase from 18% in 2022 to 27% in 2028.

In the semiconductor equipment segment, SEMI forecasts that the global semiconductor equipment market size could reach $109 billion in 2024. As an important growth engine in the global semiconductor instrument and equipment market, China's market demand has shown explosive growth in recent years. Data from SEMI shows that in 2023, the semiconductor equipment sales in mainland China reached $36.66 billion, making it the world's largest semiconductor equipment market for the fourth consecutive year since 2020.

Many overseas semiconductor companies have chosen to increase their investment in the Chinese market this year. These real voices from overseas markets are bullish on China's future growth prospects and are eager to share development opportunities.

In November this year, Europe's chip giant STMicroelectronics held an Investor Day event in Paris, France on a Wednesday local time, announcing plans to collaborate with Hua Hong Semi. By the end of 2025, it plans to produce 40nm process MCU chips at the Wuxi plant of Hua Hong, to support its long-term revenue goals.

Previously in June 2023, STMicroelectronics announced a joint venture with the domestic compound semiconductor leader Sanan Optoelectronics in Chongqing to establish an 8-inch silicon carbide device manufacturing plant. The total project construction cost is estimated to be around 3.2 billion US dollars.

STMicroelectronics CEO Jean-Marc Chery publicly stated in October this year that STMicroelectronics hopes to become an international company with a 'localization' mindset, fully understanding the company's strategy, values, and mission in the country. At the same time, China is an important part of STMicroelectronics' strategy. The company aims to think in a Chinese way and embrace change with the same enthusiasm and determination. STMicroelectronics is committed to becoming a leading company in the Chinese market and is very optimistic about the future of the Chinese market.

In March this year, the international storage chip giant Micron Technology held a groundbreaking ceremony for its packaging and testing plant in Xi'an. The new plant project is expected to start production in the second half of 2025, creating an additional 500 job positions and achieving an output value of 3.6 billion yuan. Just last year in June, Micron Technology announced plans to invest over 4.3 billion yuan in its packaging and testing factory in Xi'an in the coming years. Since 2006, Micron has invested over 11 billion yuan in Xi'an, making the Xi'an plant a key global center for Micron's DRAM granule packaging and testing, as well as module manufacturing.

The U.S. semiconductor company Intel is currently undergoing a difficult transition in a global downturn environment, affected by delays in its advanced wafer plant projects. However, Wang Rui, Senior Vice President and Chairman of Intel China, has publicly stated that China is very important to Intel, as the Chinese region has always been a leading growth driver for Intel globally. Future investments in Intel China will not decrease, and the Intel team is further advancing cooperation with Chinese market customers.