SEMI News

Meeting Attended by More than 100 Tech Company RepresentativesOver the past decade, China has become a central market for the semiconductor industry. China is now home to more than 30 percent of semiconductor end users worldwide. All semiconductor companies, regardless of size, operate in China. The rise of China’s semiconductor market has been enabled by global commerce and a vast network of supply chains that span the globe.With China now a prominent player in the industry, it has become critically important for semiconductor companies to effectively engage with China. In order to help our member companies better understand the challenges and opportunities and navigate what can be a complex landscape, SEMI hosts annual trade compliance conferences in China for trade professionals. This year, SEMI, with CompTIA and U.S. Information Technology Office (USITO), hosted two global trade seminars in China, one in Shanghai on October 30th and the other in Beijing on November 1st.Over 120 representatives from more than two dozen technology companies attended the 2018 trade compliance seminars. Over the course of the two sessions, speakers from government, business, and law firms highlighted the most pressing trade issues in China. Speakers included thought leaders, trade practitioners and senior Chinese government officials.Sessions included a deep dive on China’s draft customs reform law, a panel discussion on U.S. export controls, and a briefing on how best to engage with China Customs and how China’s products are classified. Another well-received session focused on the status of China’s export control law, which has been in the drafting process for years.However, the overarching question for many attendees was U.S.-China economic relations, which are undergoing a sea change, with the U.S. having imposed or threatened tariffs on all imports from China – totaling more than $500 billion in goods – over the past six months. As a speaker noted during a session on the U.S.-China tensions and the surrounding broader geopolitical impacts, the environment is becoming increasingly complex and volatile. In fact, on the morning of the first session, Fujian Jinhua Integrated Circuit was added to the U.S. Commerce Department’s entity list, which effectively restricts exports to the company.As a result of the trade actions, ranging from tariffs to enhanced export controls, U.S. semiconductor companies are beginning to increase prices, reduce research and development (R D) budgets, restructure supply chains and take other mitigation actions that will ultimately slow innovation. Certain export controls and other regulations that prohibit U.S.-companies from conducting business with targeted companies will put the U.S. at a competitive disadvantage.In fact and as we speak, some companies with China-based operations have cancelled orders from U.S. companies and shifted to suppliers that are not subject to U.S. actions to reduce the associated risks of supply interruption and cost increases. Ultimately, U.S. trade policy could backfire, threatening jobs, curbing growth, cutting U.S. R D investments and compromising the competitiveness of U.S. firms.SEMI will begin planning next year’s Global Trade Seminar in the coming months. If you would like to be involved in the planning, or would simply like more information about the seminar, please contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

Artificial intelligence (AI) is on the verge of transforming entire industries as it gears up to power semiconductor industry innovation and growth, thrusting the technology to front and center at SEMICON Japan 2019, December 12-14 at the Tokyo Big Sight (Tokyo International Exhibition Center).The SMART Technology Forum at SEMICON Japan will highlight the latest AI developments and trends. Supported by U.S. Commercial Service in Japan, the forum will feature Yutaka Matsuo of the University of Tokyo. An authority on AI, Matuso will give an overview of both AI business and technology. His presentation will be followed by an AI outlook from Microsoft Japan, Amazon Web Services and DefinedCrowd.A number of Japanese startups are on leading edge of AI innovation in machine and deep learning. One is Preferred Networks Inc., a company that applies cutting-edge deep learning technology to Internet of Things (IoT) applications across transportation, manufacturing and healthcare.In his opening day keynote at SEMICON Japan, Toru Nishikawa, president and CEO of Preferred Networks, Inc., will highlight the latest developments and promise of using deep learning for industrial applications. Nishikawa will unpack how AI companies jockeying for competitive advantage will win by harnessing technologies to process massive amounts of data efficiently and quickly.Following is look at Preferred Networks, Inc. and five other Japanese startups that are driving AI innovation. Within Japan's world of AI, machine learning, and deep dearning, Preferred Networks is likely the most well-known Japanese company. The parent company, Preferred Infrastructure, was founded in March 2006 by Toru Nishikawa and Daisuke Okanohara, who focused on search engine development before turning to machine learning and establishing Preferred Networks to commercialize the technology.Preferred Networks established itself as one of the world’s top providers of machine learning technology with the development of Chainer – an open source deep learning framework that has been offered free of charge since June 2015 and was released before TensorFlow, Google’s renowned Deep Learning framework. Established in 2012, ABEJA is thought to be Japan’s first venture company to specialize in deep learning. ABEJA's core technology is its AI platform ABEJA Platform. Based on this platform, the company offers various solutions to more than 100 client companies. ABEJA also offers ABEJA Insight, a specialized package service for the retail and distribution, manufacturing, and infrastructure industries. Data analytics provider BrainPad Inc. was the first Japanese AI venture listed on the Tokyo Stock Exchange. Established in 2004, before the advent of big data, BrainPad Inc. cultivated a vision of analyzing vast amounts of data in increase the competitiveness of Japanese companies. LeapMind Inc. aims to offer deep learning technology that uses fewer computing resources and draws less power. Both are important capabilities since deep learning requires considerable computing resources to perform image and speech recognition. The company’s answer to this deep learning challenge is a small form factor FPGA with low power consumption.In April 2018, LeapMind started offering the tool DeLTA-Lite to support model construction for Deep Learning. The tool simplifies the development of deep learning design models, eliminating the need for model design, hardware, and software expertise. Hacarus Inc.’s HACARUS-X AI technology, which combines sparse modeling and machine learning technology, features low power consumption and small devices such as FPGAs. In collaboration with semiconductor trading company PALTEK, Hacarus is integrating HACARUS-X algorithms with Xilinx's FPGA Zynq UltraScale + MPSoC. Both companies area also implementing HACARUS-X algorithms in a box computer.Sparse modeling is gaining attention as a modeling method by which humans can understand the judgment process of AI by extracting features from a small amount of learning data. With expertise in life science fields such as medical and biology and image processing technology, LPixel, Inc. develops image analysis systems with original algorithms and machine learning techniques. It has developed a cloud-based AI image analysis platform and an AI medical image diagnosis support technology that streamlines the review of large amounts of research data and detects image fraud in research papers and other documents for the medical and biology fields, freeing researchers to devote more time to their core work. Yoichiro Ando is a marketing director at SEMI Japan.

With (most of) the election results in from the U.S. midterms, the expected Democratic takeover of the House and the Republican’s maintaining control of the Senate is now a reality. The day of the election, DC insiders expected that the House would go to the Democrats by a margin of +/- 20, with the Republicans gaining 2-3 seats in the Senate. Not a bad prediction, which is a far cry from what the same insiders called in advance of the 2016 Presidential election.What does that mean for our members and the tech sector in general? Will there be an ease of trade tensions or less of a chance of tighter export controls? Some believe that with the midterm elections over, President Trump will have some room to take a less aggressive stance against China, setting up a “win” that he can carry into 2020. With the recent more aggressive stance by North Korea against the U.S. regarding its nuclear program, China may well have some leverage at the trade table … and the U.S. may want to make a deal that provides a path for a “win” on both fronts. Indeed, there are the makings of a potential win-win leading into the G20 meeting in Argentina when President Xi Jinping and President Trump are scheduled to meet on Dec. 1.One can see a scenario where there is a meeting of the minds and some degree of lessening tariffs; that does not mean that the effort to enhance export controls will go away. The need for tighter restrictions on export controls is driven to a great degree by the U.S. Department of Defense (DoD) and is a follow on from the previous FIRRMA legislation and attempts to curb the loss of U.S. technology critical to global competitiveness and national security. This issue will not go away anytime soon, and cases like the recent one involving Jinhua only add fuel to the fire. In addition, given how these cases can be leveraged at the negotiating table, they will continue to surface.SEMI’s approach has been to educate governments, lawmakers and administration officials on the strategic importance of the globally connected and highly complex semiconductor supply chain, and how some of the approaches will not achieve the attended goals. This approach helps to ensure that when and if it comes time to make decisions based on merit, the principals are informed. It also helps SEMI and its members develop and maintain important relationships and positions SEMI as an industry leader and spokesperson, making it a more effective advocate. As an example, on Nov 8th SEMI released its Global Trade Principles with the intention of providing a framework to all governments to guide various trade talks. It also helps to inform member companies and others from the broader tech sector of our industry position(s) so we are able to speak with one voice. These principles are aligned with our fundamental advocacy pillars of promoting free trade and market access, respect for IP, cybersecurity and national security.Will the fact that power is now split between the two chambers of Congress help or hurt? Will the House focus on investigations limit the ability to move productive legislation? Besides taking time, it may well put them at increasingly worse odds with the Senate and the President (if that is possible), creating deadlock. Some argue that if nothing moves, no harm can be done. Some also say that it may drive the President to take independent and more aggressive actions in order to demonstrate (his) effectiveness to his base. There is another view: that with the Democrats, the President may be able to lead in the advancement of legislation that will show he can get things done when others couldn’t in areas that benefit the greater good…some of which may impact our industry…such as investments in education and infrastructure development. This would be a way that he could pull in some of the votes from the middle that he has lost in his first two years in office. They say “politics makes for strange bedfellows”; one never knows what might happen in this case.Regardless of what happens, some things will not change: the global nature of our business and the needs of our members to have access to markets…and to be able to safely and efficiently leverage their technologies in the way they see fit in order to grow their business. SEMI will continue to advance the interests in what is an extremely challenging and dynamic global policy environment today. As ruling parties and representatives change around the globe, we will continue to build new relationships and educate lawmakers so they are able to make informed decisions that benefit our members. Mike Russo is VP of Public Policy and Talent Advocacy at SEMI.

Environmentally sound policies and the health and the safety of workers in the microelectronics supply chain are vitally important to SEMI and its members. For more than two decades, together we have focused on worker safety by focusing on global environment, health and safety (EHS) compliance and regulatory issues and the advancement of sound EHS practices. Today, EHS has taken on an even higher profile in the microelectronics industry with its growth across Europe, North America and Asia. Never has the industry been under greater scrutiny. The list of regulatory agencies is growing. To keep pace with rising EHS requirements and continue to ensure worker safety, we’d like your help. The SEMI EHS summit will open with a keynote presentation from Russ LaMotte, Managing Principal of Beveridge Diamond, and a recognized expert on EHS issues in the electronics industry. Member companies representing equipment, materials, facilities and devices will then each share their EHS concerns. Finally, working groups will address industry EHS challenges and gaps. Outputs from the working group meetings will form the basis for the future SEMI EHS program. The EHS issues SEMI’s program and company volunteers are addressing include: PFOA – Government efforts to eliminate pefluoro-octanoic acid and related compounds and salts (collectively known as PFOA) from company supply chains REACH – A European Union regulation to strengthen protections against chemical risks to human health and the environment. Other countries – Japan, Korea, Taiwan – have enacted similar regulations. Stockholm Convention – An international environmental treaty designed to eliminate or restrict the production and use of persistent organic pollutants (POPs) Waste Framework Directive Database – The European Commission and the European Chemicals Agency (ECHA) are building a database where all suppliers will be required to register certain articles. Other groups are dealing with country-specific aspects of the Restriction of Hazardous Substances (RoHS) and the Toxic Substances Control Act (TSCA). Complementing our advocacy efforts, SEMI has established 25 primary EHS standards with SEMI S2 (Safety) as the cornerstone. The S2 family of SEMI Standards acts as performance-based EHS considerations for semiconductor manufacturing equipment and has also been adopted by adjacent industries. Sign up for the November 29th SEMI EHS Summit today Team up with your SEMI colleagues to collectively formulate the semiconductor manufacturing industry’s EHS program. SEMI members can register for the November 29th SEMI EHS Summit by clicking here. If you cannot make this meeting but wish to be added to SEMI’s regular communication on EHS and Advocacy issues, please click here and choose Advocacy from the list of topic choices. Michael Ciesinski is vice president of the FlexTech Alliance, a SEMI Strategic Association Partner chartered with building up infrastructure for flexible electronics manufacturing.

Last week, the Office of the U.S. Trade Representative (USTR), on instruction from President Trump, notified Congress that the administration intends to begin bilateral trade negotiations with Japan, the European Union (EU), and the United Kingdom.SEMI stands strong for free trade and open markets, and roundly supports efforts to increase market access and tap into more foreign economies, especially economies like Japan and the EU, both of which are central to the semiconductor industry. The semiconductor industry, which enables the $2 trillion electronics market, is built on global commerce. SEMI members rely on a vast network of supply chains that span the globe, bringing together components and tools made all around the world and assembled into a single sub-system that is then integrated into a larger tool used in the chipmaking process.These free trade agreements will reduce tariffs, which will result in cost savings and productivity gains, and allow SEMI members to expand and grow. But the benefits of modern free trade agreements extend well beyond tariff reduction. Indeed, these trade deals will establish and enhance global trade rules that enable companies to innovate and compete fairly on a level playing field. Trade agreements strengthen certainty and further business continuity.While the exact nature and negotiation timelines for the talks remain unclear, SEMI will engage the administration, urging it to maintain high standards in these agreements, such as: Maintain strong respect for intellectual property and trade secrets through robust safeguards and significant penalties for violators Remove tariffs and non-tariff barriers on semiconductor products as well as products that depend on semiconductors Simplify and harmonize the customs and trade facilitation processes Combat any attempts of forced technology transfer Prevent use of data localization measures and enable the free flow of cross-border data flows End discriminatory and/or burdensome regulatory practices Ensure standards in all forms are market-oriented Create rules for state-owned enterprises to ensure fair and non-discriminatory treatment of all companies According to Trade Promotion Authority (TPA), the U.S. law that guides trade votes in Congress, negotiations with each country can only begin 90 days after last week’s notification. During that period, there will be intensive consultation with Congress and stakeholders. This means, at the earliest, talks can start on January 14, 2019. (Bear in mind that discussions with the UK can only begin in earnest once the UK has formally left the European Union on March 29, 2019.)The Trump administration’s announcement comes after the U.S. imposed or threatened tariffs on imports on all trading partners, including the EU and China. All told, the U.S. has imposed tariffs on more than $300 billion worth of goods. SEMI has weighed in on the detrimental nature of tariffs, arguing that tariffs on China will ultimately do nothing to address the concerns with China’s trade practices. This sledgehammer approach will introduce significant uncertainty, impose greater costs, and potentially lead to a trade war, ultimately undercutting the ability of semiconductor companies to sell overseas, stifling innovation and curbing U.S. technological leadership.Elsewhere, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the multilateral trade deal that links 11 Asia-Pacific economies, is well on its way to taking force. Canada will be taking its final steps to ratify the deal, joining Mexico, Japan and Singapore. The deal, formerly known as the Trans-Pacific Partnership, should take effect by the first half of 2019.SEMI will continue tracking ongoing trade developments. Any SEMI members with questions should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

Even for someone who has been in this industry since the days of the TI Datamath 4-function calculator and the TMS1100 4-bit microcontroller (yes, that’s been a LONG time – the movie Grease premiered the same year!), it is sometimes hard to grasp the scope and complexity of what happens in today’s leading-edge semiconductor gigafabs. In fact, the only way to comprehend the enormous volume of transactions that occur is to consider what happens in a single minute – this is illustrated in the infographic we have labeled “The Gigafab Minute.”* It’s amazing enough to think that a single factory can start 100,000 wafers every month on their cyclical journey through 1500 process steps… and have 99%+ of them emerge 4 months later to be delivered to packaging houses and then on to waiting customers. It’s quite another to realize that all of this happens continuously (24 x 7) and automatically. “How is this possible?” you ask.Well, a big part of the solution is the body of SEMI standards which have evolved since the early 80s to keep pace with the ever-changing demands of the industry. From an automation standpoint, many of these standards deal with the communications between manufacturing equipment and the factory information and control systems that are essential for managing these complex, hyper-competitive global enterprises.A significant characteristic of these standards is that they have been carefully designed to be “additive.” This means that new generations of SEMI’s communications standards do not supplant or obsolete the previous generations, but rather provide new capabilities in an incremental fashion. To appreciate the importance of this in actual practice, consider how the GEM, GEM300, and EDA/Interface A standards support the transactions that occur in a single Gigafab Minute.Starting at 1:00 o’clock on the infographic and moving clockwise, you first notice that 2.31 wafers enter the line. Of course, these are actually released in 25-wafer 300mm FOUPs (Front-Opening Unified Pod), but 100K wafers per month translates to 2.31 per minute. Since these factories run continuously, once the line is full, it stays full. And with an average total cycle time of 4 months, this means that there are 400K wafers of WIP (work in process) in he factory at any given time. This number, and the total number of equipment (5000+), drive the rest of the calculations.GEM (Generic Equipment Model) – SEMI E30, etc.The GEM messaging standards were initially defined in the early 90s to support the factory scheduling and dispatching applications that decide what lots should go to what equipment, the automated material handling systems that deliver and pick-up material to/from the equipment accordingly, the recipe management systems that ensure each process step is executed properly, and the MES (Manufacturing Execution System) transactions that maintain the fidelity of the factory system’s “digital twin.”Every minute of every day, GEM messages support and chronicle the following activities: 240 process steps are completed (i.e., 240 25-wafer lots are processed), 300 recipes are downloaded along with a set of run-specific adjustable control parameters, and 600 FOUPs are moved from one place to another (equipment, stockers, under-track storage, etc.). For each of these activities, the factory’s MES is notified instantaneously.GEM300 – SEMI E40, E87, E90, E94, E157With the advent of 300mm manufacturing in the mid-to-late 90s, a global team of volunteer system engineers from the leading chip makers defined the GEM300 standards to support fully automated manufacturing operations. Starting at 5:00 o’clock on the infographic, the number of transactions per minute jumps almost 3 orders of magnitude, from the monitoring of 900 control jobs across 4000 process tools to the tracking of 360,000 individual recipe step change events. This level of event granularity is essential for the latest generation of FDC (Fault Detection and Classification) applications, because precise data framing is a key prerequisite for minimizing the false alarm rate while still preventing serious process excursions. In this context, more than 6000 recipe-, product- and chamber-specific fault models may be evaluated every minute.Simultaneously, the applications that monitor instantaneous throughput to prevent “productivity excursions” and identify systemic “wait time waste” situations depend on detailed intra-tool wafer movement events. In a fab with hundreds of multi-chamber, single-wafer processes, 75,000 or more of these events occur every minute. EDA (Equipment Data Acquisition) – SEMI E120, E125, E132, E134, E164, etc.Rounding out the SEMI standards in our example gigafab is the suite of EDA standards which complement the command and control functions of GEM/GEM300 with flexible, high-performance, model-based data collection. The EDA standards enable the on-demand collection of the volume and variety of “big data” required from the equipment to support the advanced analysis, machine learning, and other AI (Artificial Intelligence) applications that are becoming increasingly prevalent in leading semiconductor manufacturers. As EUV (Extreme Ultraviolet) lithography moves from pilot production to high-volume manufacturing at the 7nm process node and beyond, the litho process area will become a major source of process data by itself, generating 10 GB of data every minute. This is in addition to the 100 GB of data collected from other process areas. The End ResultThe final wedge (12:00 o’clock) in our infographic highlights the real objective – which is producing the millions of integrated circuits that fuel our global economy and provide the technologies that are an integral part of our modern way of life. Assuming a nominal die size of 50 square mm (typical of an 8 GB DRAM), the 2.31 wafers we started at 1:00 o’clock result in almost 3200 individual chips. But none of this would be possible without the pervasive factory automation technology we now take for granted. So, as you finish reading this posting on whatever device you happen to be using, take a micro-moment to acknowledge and thank the hundreds of standards volunteers whose insights and efforts made this a reality!You may not be responsible for running a gigafab anytime soon, but the SEMI standards used in this setting are no less applicable to any Smart Manufacturing environment. Give us a call if you’d like to know more about how these technologies can benefit your operations for many years to come.Alan Weber is Vice President, New Product Innovations, at Cimetrix Incorporated. Previously he served on the Board of Directors for eight years before joining the company as a full-time employee in 2011. Alan has been a part of the semiconductor and manufacturing automation industries for over 40 years. He holds bachelor’s and master’s degrees in Electrical Engineering from Rice University. For more information on SEMI Standards, please click here.

On June 1st, 2018, Toshiba sold Toshiba Memory, Toshiba’s memory business, to an investment group led by Bain Capital. Toshiba Memory was then owned by a consortium of American, Japanese and Korean companies.After the long and tough negotiations, Toshiba Memory moved forward at full throttle, holding a groundbreaking ceremony for its new 3D NAND fab (100,000 WPM) in Kitakami in July and, in September, celebrating the opening of Fab 6 Phase 1 (50,000 WPM). To be sure, NAND memory is a key feature of Japan’s semiconductor industry. But the sector’s reach extends well beyond memory with its rich and versatile product portfolio nourished by active investment.Born in the early 1950s, Japan’s semiconductor industry today boasts more than 30 companies with fabs. Many feature 200mm and smaller wafer lines with legacy technologies, form factors that account for the bulk of the world’s semiconductors and are the oxygen of Japan’s chip industry. Clearly, the world is not built only with the state-of-art 7nm processed chips on the latest generation 300mm lines. Japanese chipmakers are flourishing.Automotive SemiconductorsRenesas Electronics remains a giant in microcontrollers (MCU) and system on chip (SoC) devices for automotive applications. According to IHS Markit, Renesas automotive semiconductor revenue in 2017 reached $3.6 billion while Inineon Technologies and NXP Semiconductors revenues were $3.4 billion and $3.7 billion, respectively. The three companies dominate the global automotive MCU global market. The company recently acquired Integrated Device Technology (IDT), a U.S. fabless company specializing in analog/mixed signal chips, to strengthen its automotive semiconductor portfolio. Renesas operates four volume production fabs, according to the latest World Fab Forecast from SEMI. Renesas’s microcontrollers for automotive applications (Source: Renesas Electronics) Power SemiconductorsWith power semiconductors the chips of choice for boosting the efficiency and performance of motors and batteries used in equipment, demand for the devices is rapidly growing, especially for automotive applications. Power semiconductor companies in Japan are legion and include Denso, Fuji Electric, Fujitsu Semiconductor, Hitachi, Kyocera, Mitsubishi Electric, New Japan Radio, Origin Electric, Phenitec Semiconductor, Renesas, Rohm, Sanken Electric, Sansha Electric Manufacturing, Seiko NPC, Shindengen Electric Manufacturing, Sumitomo Electric Device Innovations, Toshiba and Toyota Industries. The companies account for 26% of global power semiconductor capacity and will spend $317 million for construction and equipping in 2018.CMOS SensorsSony dominates the CMOS image sensors market with 42% share in 2016, according to Yole Développment. To meet growing demand for high-end CMOS image sensors, Sony has acquired several legacy 300mm wafer fabs and retooled them for CMOS sensor manufacturing. What’s more, Sony’s May announcement of its mid-term corporate strategy includes a 1 trillion Japanese yen investment in CMOS image sensors targeted to automotive applications by March 2021.Sony’s 7.42 effective megapixel stacked CMOS image sensor for automotive cameras (Source: Sony Corporation) MEMSMEMS is perhaps the most wide-ranging device market: Every application requires different capabilities and functions. The latest World Fab Forecast report lists 17 MEMS companies in Japan, though three makers of fast-growing RF MEMS, typically known as surface acoustic wave (SAW) or bulk acoustic wave (BAW) filters, are coming to the attention of semiconductor manufacturers. All are familiar passive electronic components suppliers – Murata Manufacturing, Taiyo Yuden and TDK – and all acquired legacy semiconductor fabs to manufacture RF MEMS.Their high-performance radio wave filters make mobile phones usable around the world. Research companies like Yole expect the introduction of 5G cellular mobile communication systems to fuel another wave of growth of the RF MEMS market. Murata Manufacturing’s SAW filters for smart phones (source Murata Manufacturing) Japanese Supply Chain Meets All Different NeedsJapan’s semiconductor supply chain provides one third of the world’s semiconductor manufacturing equipment and more than half of the industry’s materials. But Japanese suppliers also work with small and midsize makers of highly versatile chips critical to enabling the explosion of smart applications.Meet these versatile Japanese suppliers at SEMICON Japan to find solutions to your unique needs and help the world get smarter. Themed “Dreams Start Here,” SEMICON Japan 2018 reflects the promise of AI (artificial intelligence), Internet of Things (IoT) and Smart technologies. Featuring more than 750 exhibitors from around the world, the event is the gathering place to connect the people, technologies and business across the electronics manufacturing supply chain, from semiconductor manufacturing to autonomous cars, robotics and other smart applications. For more information about SEMICON Japan, visit www.semiconjapan.org.Yoichiro Ando is a marketing director at SEMI Japan.

Last week, SEMI joined a coalition of business groups in calling for Ambassador Robert Lighthizer, U.S. Trade Representative, to enact an exclusion process for the most recent tranche of tariffs on $200 billion in goods imported from China. While an exclusion process was provided for in the previous tariff lists, which cover about $50 billion in goods, the administration has said that no similar process will be provided on the most recent tariffs on $200 billion (List 3), which took effect Monday. SEMI members will face millions of dollars in additional duties as a result of these tariffs. This action will also curb growth, stifle innovation, and introduce significant uncertainty in the semiconductor industry. Americans for Free Trade is a diverse coalition, which includes hundreds of companies across the United States, to illustrate the impacts of tariffs on American businesses, consumers and manufacturers. SEMI is a member of this coalition. The full text of the letter can be found here. Any SEMI members with questions should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

Tensions between the U.S. and China have reached fever pitch as the Trump administration imposed higher tariffs on $200 billion of Chinese goods last Monday, adding to the $50 billion in goods hit with higher duties earlier this year. Bloomberg News reported that “the combined $250 billion in products facing levies is almost half the value of imports from China last year.”China countered by meting out stiffer tariffs on $60 billion in U.S. goods, on top of the $50 billion already levied, and canceling planned trade negotiations with the Trump administration.Days before the sharp escalation of the trade conflict, SEMI president and CEO Ajit Manocha joined SEMI China president Lung Chu in hosting a closed-door round table with 16 senior semiconductor industry executives in Shanghai. The goal: An update from the China semiconductor sector on its needs as the chip industry braces to weather the conflict. Manocha and Chu then met with influential China media outlets including Semiconductor Manufacturing, China Integrated Circuit, Silicon Semiconductor and IC Café to reiterate SEMI’s position on trade.“The basic principles of SEMI are free and fair trade, open markets, cooperation for mutual benefit, and protection of intellectual property rights,” Manocha told the reporters. “Tariffs and trade frictions are bound to harm the industry’s development.”Manocha highlighted efforts over the past few months by the SEMI advocacy team to educate U.S. policymakers on the impact of tariffs on the development of the semiconductor industry. Last month, the office of the U.S. Trade Representative (USTR) held a hearing in Washington, D.C. to solicit public comment on then-proposed tariffs on $200 billion of Chinese imports to the U.S. Testifying on behalf of the semiconductor industry, SEMI stressed that tariffs on more than 100 tariff lines covering items critical to semiconductor manufacturing “will harm companies in the semiconductor supply chain by increasing business costs, introducing uncertainty, and stifling innovation.” SEMI had testified twice before this year – the first time in May, opposing levies on $34 billion in Chinese goods, and the second in July to speak out against higher duties on $16 billion worth of Chinese products.SEMI China president Lung Chu made clear the consensus of China’s semiconductor sector: The trade war will profoundly impact the global semiconductor industry. He also stressed that SEMI, as a global industry organization linking the global electronic semiconductor industry chain, will continue to promote win-win cooperation between the U.S. and China.Manocha reaffirmed SEMI’s longstanding commitment to promote cooperation among nations and policies that foster industry growth.“For the growth of the semiconductor industry, SEMI is focused on four important factors, and we call them the 4 T’s, namely Tax, Technology, Talent, Trade,” Manocha told the media. “All are indispensable for the development of the industry.” SEMI president and CEO Ajit Manocha and SEMI China president Lung Chu host press conference in Shanghai.Because the semiconductor industry is international, with key features spread across a number of regions, cross-border cooperation is an eternal theme, Chu told the gathering. To maintain the vitality of China's semiconductor industry, the region must deepen its integration with the international semiconductor ecosphere. He acknowledged that there will be no quick answers to easing trade tensions between the U.S. and China but that SEMI would continue to press ahead in efforts to help improve relations. Despite the conflict, the industry remains optimistic about the growth of China’s semiconductor industry, he said."However, we need to face up to the fact that there is still a certain gap between the domestic semiconductor industry and that of international advanced level,” Lu said. “Therefore, international cooperation is the key to industry growth."Of the four cornerstones of the semiconductor industry – design, manufacturing, testing and equipment materials – China in recent years has narrowed the gap with its international counterparts in testing capabilities, Chu said. For China’s semiconductor industry to flower, the region must build strengths in design, manufacturing and materials too.“The semiconductor industry needs long-term investment, persistence and patience, and also needs win-win cooperation, continuous innovation and product applications across the entire industry,” Chu said. “Money is not the only incentive.”Manocha emphasized the theme of international cooperation, with the global semiconductor industry working in harmony.“The global semiconductor industry chain is inseparable, and each region has its own advantages,” Manocha said. “So, we will continue to work hard to create a win-win, inclusive global industrial atmosphere.”For its part, SEMI China is focused on becoming the best partner for China to realize its semiconductor dream by continuing to provide services that encourage international cooperation. That role will grow in importance with SEMI’s expansion into application areas such as smart manufacturing, smart transportation, smart data and smart automotive – all requiring tighter integration of the electronics industry supply chain.Cherry Sun is a marketing manager at SEMI China.

U.S. Government Imposes Tariffs on $200 Billion of Goods and China Retaliates on $60 Billion of GoodsEarlier this week, the U.S. Trade Representative (USTR) released a 10 percent tariff on $200 billion in imports from China, including more than 90 tariff lines central to the semiconductor industry.The 10 percent tariff will take effect on September 24, 2018, and rise to 25 percent on January 1. These tariff lines will cost SEMI’s 400 U.S. members tens of millions of dollars annually in additional duties. However, counting the products included in the previous rounds of tariffs, the total estimated impact exceeds $700 million annually. China has already announced that it will respond with tariffs on $60 billion worth of U.S. goods. In his notice, President Trump said the U.S. will impose tariffs on $267 billion worth of goods if China retaliates. The U.S. government removed 279 total tariff lines, including three lines that impact our industry: silicon carbide, tungsten, and network hubs used in the manufacturing process.As we’ve noted, intellectual property is critical to the semiconductor industry, and SEMI strongly supports efforts to better protect valuable IP. However, we believe that these tariffs will ultimately do nothing to address the concerns with China’s trade practices. This sledgehammer approach will introduce significant uncertainty, impose greater costs, and potentially lead to a trade war. This undue harm will ultimately undercut our companies’ ability to sell overseas, which will only stifle innovation and curb U.S. technological leadership.Product Exclusion Process – List 2USTR formally published the details for the product exclusion process for products subject to the List 2 China 301 tariffs (the $16 billion tariff list). If your company’s products are subject to tariffs, you can request an exclusion.In evaluating product exclusion requests, the USTR will consider whether a product is available from a source outside of China, whether the additional duties would cause severe economic harm to the requestor or other U.S. interests, and whether the product is strategically important or related to Chinese industrial programs (such as “Made in China 2025”).The request period ends on December 18, 2018, and approved exclusions will be effective for one year, applying retroactively to August 23, 2018. Because exclusions will be made on a product basis, a particular exclusion will apply to all imports of the product, regardless of whether the importer filed a request.More information, including the process for submitting the product exclusion request and details what information should be included in your submission can be found here. Please let me know if your company plans on filing an exclusion. SEMI has prepared a document that includes guidelines for your exclusion filing, an explainer on how to submit, and links to official government info. SEMI is glad to assist your companies file exclusion requests for your products. SEMI will continue tracking ongoing trade developments. Any SEMI members with questions should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].