"Don't compete internally, cooperate!" AMEC Chairman makes significant statement: Chip equipment industry has 15 forms of internal competition, excessive vertical integration in supply chain creates unfair competition.
On September 4, at the 13th Semiconductor Equipment and Core Components & Materials Exhibition, Yin Zhiruo, Chairman of Advanced Micro-Fabrication Equipment Inc. China (688012.SH, stock price 195.40 yuan, market cap 122.3 billion yuan), made significant remarks. He stated that the semiconductor micro-processing equipment industry faces ten major challenges. Additionally, Yin mentioned malicious competition phenomena in the semiconductor equipment industry and listed 15 manifestations of internal competition within the sector, including on-site reverse engineering of equipment, unfair terms between equipment suppliers and component vendors, and using media to defame competitors.
When analyzing the internal competition behavior of "vertical integration monopoly attempts," Yin explained in detail that historically, many large chip manufacturing companies have engaged in chip manufacturing, equipment production, and key component manufacturing simultaneously, attempting to achieve monopolistic goals through excessive vertical integration of the supply chain.
**Excessive Vertical Integration Brings Unfair Competition**
Currently, international chip manufacturers and chip equipment suppliers maintain high levels of specialization. Chip manufacturing is represented by companies like TSMC, Samsung, and GlobalFoundries, while chip equipment suppliers include ASML, Applied Materials, and Lam Research.
Among domestic manufacturers, chip manufacturers and chip equipment suppliers also maintain high levels of specialization. Chip manufacturers are represented by SMIC (688981.SH), Hua Hong Company (688347.SH), and Nexchip (688249.SH), while chip equipment suppliers include Advanced Micro-Fabrication Equipment Inc. China, Naura Technology Group (002371.SZ), and ACM Research (688082.SH).
Yin's belief that vertical integration creates unfair competition is based on these industry characteristics.
When chip manufacturing companies are in the yield ramp-up stage or new process development phase, they need to maintain close cooperation with chip equipment manufacturers. However, during collaboration, chip manufacturing companies must pay close attention to protecting their "Know How."
Yin also stated in his remarks that other chip manufacturing companies are very wary of purchasing equipment from vertically integrated companies. This is because vertically integrated companies' participation in chip manufacturing or their equipment deployment may lead to the leakage of these chip manufacturing companies' technical and commercial secrets.
Furthermore, vertically integrated manufacturers may also reveal some "Know How" knowledge to their chip equipment suppliers through their chip manufacturing facilities.
Previously, when interviewing ASML, their staff stated: "Information security is one of a company's most basic business commitments, especially in a globalized context where compliance and information protection policies are crucial."
This may be precisely why chip manufacturers and chip equipment suppliers have maintained long-term high levels of specialization. Yin also noted that historically, some chip (manufacturing) companies have attempted equipment manufacturing, but the vast majority failed.
**Don't Compete Internally, Cooperate**
According to an ACM Research announcement in July this year, as China's semiconductor equipment localization process continues to advance, semiconductor equipment localization has achieved certain results.
ACM Research noted that among various semiconductor equipment sub-products, the highest localization rate is for photoresist stripping equipment, reaching over 90% and basically achieving localization. According to Pacific Securities' report "Semiconductor Equipment Localization Rate Improvement, Autonomous and Controllable Capabilities Continuously Enhanced," the localization rates for thermal processing, etching equipment, and cleaning equipment are around 20%. CMP (Chemical Mechanical Planarization) and PVD (Physical Vapor Deposition) equipment localization rates are around 10%. Additionally, coating and developing equipment is gradually achieving breakthroughs from zero to one.
This means that domestic semiconductor equipment localization rates still have room for improvement, with a considerable portion of equipment having relatively low localization rates. One contributing factor is that semiconductor equipment R&D typically requires massive funding and lengthy development cycles.
"Processing microscopic nanometer structures is approaching physical limits, requiring the integration of knowledge and technology from over 50 disciplines created by humanity," Yin stated. In this context, the development and mass production of micro-processing equipment requires substantial R&D funding and capital support. R&D funding can be 10, 30, or even 100 times the equipment selling price.
He therefore believes that smaller equipment companies should be encouraged to collaborate with larger companies, reducing internal consumption in the domestic equipment industry and promoting healthy development of the semiconductor equipment sector.
At the 13th Semiconductor Equipment and Core Components & Materials Exhibition, Advanced Micro-Fabrication Equipment Inc. China launched six semiconductor equipment products. These devices cover key processes including plasma etching, atomic layer deposition (ALD), and epitaxy (EPI), demonstrating the company's core technological strength.
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