交易禅师

China wants to drive down the prices of semiconductors, chips, and storage to rock-bottom levels! If you can't hold on, it feels like the biggest strategic mistake of the decade. The US has put so much effort into blocking China's access to lithography machines, only to force China to develop its own. Let's review the timeline. In 2018, the US began to pressure China, restricting the export of high-end lithography machines. Then, it teamed up with the Netherlands and Japan to cut off China's supply of EUV and advanced DUV machines. The Netherlands even went further last October, restricting DUV exports from 7 nanometers to 14 nanometers. The logic behind the blockade is simple: if you can't buy the equipment, you can't produce advanced chips, and your tech industry will be locked out of the high-end market. But what's the result? SMIC started testing its domestically produced DUV lithography machine last year. This year, domestic lithography machines have begun to be delivered to SMIC, Huahong, and Changxin in small batches. A domestically produced EUV prototype has also emerged, although it's still rudimentary. However, 13.5-nanometer extreme ultraviolet light has already been generated. This is the paradox of the blockade. If you don't block China, it will continue to buy ASML's equipment and comfortably use imported goods, without any motivation to develop its own. But once you block it, you're forcing China to invest tens of billions of yuan and thousands of engineers into developing its own lithography machines, no matter the cost. This isn't the first time this has happened in the history of semiconductors. The more you block a major country, the faster it develops its own technology. Huawei was sanctioned, which led to the development of HarmonyOS and Kirin chips. The US didn't allow China to use GPS, which led to the development of Beidou. Now it's the turn of lithography machines. I'm not saying that China's domestically produced lithography machines have caught up with ASML yet; there's still a huge gap. Five prototype machines versus hundreds of ASML machines, DUV versus EUV – it's not even on the same level in the short term. But the direction is irreversible. When a country with a population of 1.4 billion decides to develop something at all costs, history has proven that it will likely succeed, it's just a matter of time. What the US wants to see most is China being unable to produce lithography machines forever, relying on imports forever. What it least wants to see is China being forced to develop its own technology. But now, the latter is happening. The blockade hasn't locked down China's tech industry; instead, it has accelerated the development of domestic alternatives. From an investment perspective, this trend of domestic substitution may have just begun.