According to a report from Bloomberg, a drug company in Mumbai, India, Shreya Life Sciences has engaged in trading chips of advanced technology to Russian, raising concerns among the U.S. and its European allies.

The report indicated that Shreya exported 1,111 units of Dell’s most advanced servers to Russia between April and August of this year. The servers, known as PowerEdge XE9680, feature chips made by NVIDIA or AMD.

The servers, which contain chips made by NVIDIA or AMD, are among the items restricted by the U.S. and the EU. However, the report noted that these shipments are only part of a series of advanced technology exports that Shreya has legally made to Russia since September 2022. The shipments, valued at $300 million, were imported by two Russian trading companies: Main Chain Ltd. and I.S. LLC, as indicated by the report.

According to the report, Shreya’s shipments highlight a loophole in Western governments’ efforts to restrict Russia’s access to dual-use technology with potential military applications. The Bloomberg report noted that India has gradually become the second-largest supplier of restricted technologies to Russia, following China.

Notably, while India serves as an intermediary helping Russia access restricted processors, the actual origin of the shipments may be Malaysia, as the report noted that Indian import data from March to August 2024 shows that 1,407 of the same Dell units were imported into India from Malaysia.

Regarding India’s business relationship with Russia, the report noted that Prime Minister Narendra Modi’s government is not participating in the various rounds of U.S. and EU sanctions against Moscow. In fact, India has been relying on Russia for military equipment.

Additionally, India has become a key buyer of Russian crude oil since European countries halted imports, taking advantage of significant discounts offered by Russia, according to the report.

In response to the report regarding the shipments, Dell stated that it stopped selling its products in Russia in February 2022, right after the full-scale invasion of Ukraine. Both NVIDIA and AMD also emphasized their commitment to full compliance with export controls, according to the report from Bloomberg.

(Photo credit: NVIDIA)

Amid the escalating tech war between China and the US, along with rising geopolitical tensions, China has accelerated its import of chip manufacturing equipment since the middle of last year to counter potential US chip sanctions, with Dutch company ASML and Japanese company Tokyo Electron (TEL) benefited the most.

Notably, according to the Semiconductor Equipment and Materials International (SEMI), despite US sanctions preventing China from acquiring advanced EUV lithography equipment from ASML, it reported that China’s spending on chip manufacturing equipment has reached USD 25 billion in the first half of this year, exceeding the combined total of Korea, Taiwan, and the US. SEMI data also shows that China’s spending remained strong in July and is expected to set a new annual record.

Meanwhile, per the trade data from China’s General Administration of Customs cited by Bloomberg, from January to July this year, Chinese companies imported chip manufacturing equipment worth nearly USD 26 billion, surpassing the previous record set in the same period in 2021.

SEMI projects that China will become the largest investor in new fab construction, including equipment purchases. It is expected that the country’s total spending on chip equipment for the entire year of 2024 will reach USD 50 billion.

Clark Tseng, SEMI’s senior director of market intelligence, further highlighted that at least more than 10 tier-two chip manufacturers are actively purchasing new equipment, which is driving China’s overall spending.

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 revenue.

For Japanese company TEL and Dutch company ASML, the contribution from the Chinese market is even more significant, with nearly half of their revenue coming from China.

Additionally, per a report from Commercial Times, amid a global economic slowdown, China is the only region where chip manufacturing equipment spending increased in the first half of this year compared to the same period last year.

Tseng also noted that SEMI anticipates spending on new plant construction in China will “normalize” over the next two years.

Read more

• [News] China’s Import of Chip Making Equipment Hit New High This Year, with Mature Nodes Driving the Demand
• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

(Photo credit: iStock)

On August 15, China’s Ministry of Commerce announced restrictions on the export of the strategic mineral antimony for national security reasons, set to take effect on September 15, 2024. According to sources cited by the Commercial Times, the market price of antimony could skyrocket to USD 30,000 per ton.

Antimony is strategically significant due to its extensive applications in solar photovoltaics, batteries, fireproof materials, military equipment, and even nuclear weapons.

Meanwhile, as per data from the U.S. Geological Survey (USGS), China is the world’s largest producer of antimony, with a production of 83,000 tons last year, accounting for 48% of the global supply. Other major producers include Myanmar, with 4,600 tons annually, Turkey with 6,000 tons, and Tajikistan with 21,000 tons.

The report from Asia Financial on August 17 indicated that around 20% of the world’s antimony is used in manufacturing solar photovoltaic glass to enhance the performance of solar cells. Most of the remaining supply is used in lead-acid batteries.

Additionally, antimony has growing strategic importance due to its role as a key material in military equipment such as nuclear weapons, infrared missiles, and night vision devices, as well as a hardening agent for bullets and tanks.

As a result, the global supply of antimony is facing a shortage. Reportedly, since the beginning of this year, the price of this rare metal has already doubled, with current trading prices exceeding USD 22,000 per ton, setting a historic high.

Chetan Soni, president of the UK-based Commodity Research Unit (CRU), stated that given the current historical high prices, China’s recent announcement could further drive up prices. He added that prices might reach USD 30,000 per ton as buyers seek to secure future production or stockpile materials.

Soni believes that if antimony prices rise again, it will increase the Western world’s dependence on China’s critical minerals, including rare earths, gallium, and germanium, which have also faced export restrictions since last year.

Part of the market supply tightness may be due to disruptions in Russian supply, caused by sanctions imposed after Moscow’s invasion of Ukraine in February 2022, as well as a reduction in domestic production in Russia.

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• [News] China’s AMEC Sues U.S. for Blacklisting it as a Chinese Military Company
• [News] China-US Chip War Escalated as YMTC Sues Micron for Patent Infringement

(Photo credit: iStock)

Japanese semiconductor equipment maker Tokyo Electron (TEL) has raised its profit forecast for the fiscal year 2024 (ending March 2025), expecting an operating profit of JPY 627 billion (approximately USD 4.3 billion), an 8% increase from its previous guidance.

Tokyo Electron contributed the strong growth trend compared to the previous fiscal year, driven by China’s significant investment in mature semiconductor nodes. The company has also raised its sales and profit outlook for the period from April to September.

For the quarter ending in June, Tokyo Electron reported revenue of JPY 555 billion, reversing a declining trend seen since 2022. Operating profit for these three months was JPY 165.7 billion.

Source: TEL

The past year, to Tokyo Electron, has been in turbulence year, as initial optimism from AI demand and the semiconductor manufacturing industry was tempered by U.S. export restrictions.

Regarding the matter, Hiroshi Kawamoto, finance division officer of Tokyo Electron, stated in a conference call that there are currently no signs of the U.S. implementing stricter restrictions on chip-making tools, while the company will continue to closely monitor the situation.

As of the quarter ending in March, over 47% of its revenue came from China due to increased equipment stockpiling in anticipation of potential U.S. sanctions. In the recent quarter, nearly 50% of revenue was generated from the Chinese market.

Source: TEL

Looking ahead to the next fiscal year (FY2025), Tokyo Electron expects double-digit growth, driven by strong demand for AI servers and an increase in AI-enabled PCs and smartphones.

This resurgence in demand is anticipated to boost the market. The company expects further expansion in DRAM production and a recovery in NAND investment due to inventory adjustments. However, investment in advanced logic and foundry services is expected to offset the slowdown in mature process technologies.

According to a report from Bloomberg, the US is reportedly considering new measures and could unilaterally impose restrictions on China as early as late August. These measures would limit China’s access to AI memory and related equipment capable of producing them.

Moreover, another report from Reuters further indicates that US allies, including semiconductor equipment manufacturers from Japan, the Netherlands, and South Korea—such as major Dutch semiconductor equipment maker ASML and Tokyo Electron—will not be affected in their shipments. The report also notes that countries whose exports will be impacted include Israel, Taiwan, Singapore, and Malaysia. 

Bloomberg, citing sources, revealed that the purpose of these measures is to prevent major memory manufacturers like Micron, SK hynix, and Samsung Electronics from selling high-bandwidth memory (HBM) to China.

These three companies dominate the global HBM market. Reportedly, regarding this matter, Micron declined to comment, while Samsung and SK hynix did not immediately respond to requests for comment. 

Bloomberg’s source also emphasized that the US has yet made a final decision. The source also state that if implemented, the new measures would cover chips such as HBM2, HBM3, and HBM3e, as well as the equipment needed to manufacture these chips.

The source further revealed that Micron will essentially not be affected by the new regulations, as Micron stopped exporting HBM to China after China banned Micron’s memory from being used in critical infrastructure in 2023.

Reportedly, it is still unclear what methods the US will use to restrict South Korean companies. One possibility is the Foreign Direct Product Rule (FDPR). Under this rule, if a foreign-made product uses any US technology, even just a small amount, the US can impose restrictions.

Both SK hynix and Samsung are said to be relying on chip design software and equipment from US companies such as Cadence Design Systems and Applied Materials.

Read more

• [News] U.S. Reportedly Enhancing Chip Export Restrictions to China, while NVIDIA’s H20 Might Get Banned
  
• [News] China-US Chip War Escalated as YMTC Sues Micron for Patent Infringement

(Photo credit: SK hynix)