The trade war between China and the United States, accentuated to the maximum by the previous administration in the White House, resulting in a series of vetoes of companies from the most populous country in the world that prevented them from trading in countries in the orbit of the United States and even use their technology. The solution? China is buying used manufacturing equipment from Japan.
At the moment we are facing a shortage crisis that makes the offer of products in terms of all types of hardware more scarce than usual. This leads different manufacturers to seek solutions to survive, including companies in China that are under veto.
SMIC's problems to survive
China is not a leader in terms of volume of semiconductor production, since its largest foundry, known as SMIC, barely has a significant market share globally.
| Foundry | Wafers per month | Market share |
| Samsung | 3.1 million | 14.7% |
| TSMC | 2.7 million | 13.1% |
| Micron | 1.9 million | 9.3% |
| SK Hynix | 1.85 million | 9.0% |
| Kioxia | 1.6 million | 7.7% |
| Intel | 0.884 million | 4.1% |
However, the obligation in China that each company must be owned by the State makes it become an already geopolitical and geostrategic problem, so the United States is afraid of sharing its technology with China so as not to lose its hegemony in the world. Which has led them to veto access to technology for the manufacture of processors with more advanced nodes to SMIC.
This would have been enough to send SMIC missing. His approach to survive and overcome the veto? Use less advanced manufacturing nodes and bet on new packaging systems for processors, which entails buying new equipment for the manufacture of chips under old nodes.
China is buying used equipment from Japan
With each manufacturing node of the different semiconductors, all the equipment for the previous node or at least a good part of it is completely out of use. This is one of the reasons why the deployment of a new node is so expensive since we are talking about creating an entire factory to manufacture chips. The veto of Chinese companies like SMIC means that they cannot buy the machinery necessary for production or access the technology necessary to access their own.
Through an article in Nikkei Asia, it is reported that China is buying second-hand equipment for manufacturing to bypass the United States sanctions. Which has caused an increase in prices in the second-hand market for industrial equipment. Due to the global shortage of chips that we are experiencing, many manufacturers are repurchasing and even refitting old equipment.
So the machines used for the production of chips that were previously on the verge of scrapping are now highly sought after by different manufacturers around the world, especially those in China.
From Nikkei Asia they cite two sources for their information, the first is from Mitsubishi UFJ Lease & Finance
"Almost 90% of the machines (for semiconductor production) already used (in Japan) seem to be heading to China"
Regarding your second source to a second-hand (industrial) equipment dealer:
"Machines that were basically completely useless several years ago are now being sold for 100 million yen."
All of this highlights the crisis we are experiencing in terms of the manufacture of different semiconductors, which in combination with the veto suffered by foundries in China means that exceptional solutions have to be found for these times.
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