[News] Applied Materials and Lam Research Reportedly Seek Alternatives to Chinese Components

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Ahead of the upcoming U.S. presidential election, U.S. semiconductor equipment giants Applied Materials and Lam Research are already working out to exclude Chinese firms from supply chains, driven by Washington’s directives to limit China’s role in sensitive leading-edge technologies, according to a report by The Wall Street Journal.

According to the report, major chip toolmakers, including Applied Materials and Lam Research, are notifying suppliers that they must source alternatives for certain Chinese components or risk their vendor status. Suppliers have also been informed that they must not have Chinese investors or shareholders, according to sources cited by the report.

The move would potentially drive up costs, as finding non-Chinese alternatives at comparable prices will be challenging, noted industry executives interviewed by The Wall Street Journal.

China is now reportedly the largest market by revenue for top global chip equipment suppliers. The latest quarterly financial reports from companies such as Applied Materials, Lam Research, and KLA show that China contributes approximately 40% of their sales.

When asked about whether the act of finding alternatives to Chinese-made components has been initiated, Lam Research stated it complies with U.S. export controls within the chip-manufacturing supply chain, while Applied Materials indicated it seeks alternative component sources to ensure consistent availability, according to the report.

It is worth noting that as the U.S.-China Chip War escalates, both presidential candidates, Donald Trump and Kamala Devi Harris, promise a firmer stance on trade with China, and the semiconductor industry is particularly targeted due to its national security significance recently.

Earlier in September, the Biden administration has introduced new export controls targeting critical technologies, including quantum computing, advanced chip making tools, specific components and software tied to metals and alloys, and high-bandwidth chips essential for AI applications, according to a previous report by CNBC.

While these restrictions apply globally, concerns have been raised on major semiconductor equipment companies, such as Dutch giant ASML and U.S. heavyweights Applied Materials and Lam Research.

The Wall Street Journal report also mentions that last year, the Commerce Department already introduced regulations requiring U.S. toolmakers to secure licenses before sharing technical details with Chinese suppliers. They received a temporary license to maintain current suppliers, set to expire at the end of 2025. This summer, the department clarified that suppliers outside China must also comply if their parent company is based in China.

Read more

• [News] US Reportedly Expands Investigation into Applied Materials, Possibly due to Concerns of Shipments to SMIC
• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

(Photo credit: Applied Materials)