2/I’ve already heard of at least one firm on the Entity List that has set up a shell to keep using American EDA tools
3/To give example of replacement of tools, Applied Materials was way behind in conductor etch tools in 2010 and caught up by 2015. Some tool vendors think that with subsidies the catch-up for non-American vendors could be much faster this time
4/To give an idea of how behind the curve BIS is on the chip supply chain, BIS first came out with the new rules and then approached industry to ask how to enforce the rules. Naturally, industry was less than forthcoming
5/part of this lack of knowledge is tradition as BIS has tried to keep itself distant from industry to avoid conflicts of interest
6/the vendor that said moving more production offshore was the solution was KLA on its May 5 investor call
7/I got to hear about the internal study from a participant in the study but I did not get to see the actual study. The study deemed that using offshore-produced American equipment &supplying it to TSMC would be the fastest way to de-Americanize a fab
8/the study thought big gaps at cutting edge for American inspection and etch tools in particular. Cost of developing offshore tools would add 1.6 to 3.5 billion to fab and need 4-6 years or more for new fab
9/however it sounded like the study was assuming something along the lines of current competitive conditions i.e. the existence of subsidies but trying to run operations on an efficient & profit-making basis
10/if in reaction to anti-Huawei moves, flood of subsidies comes in, then such assumptions are wrong. Different countries beyond China could rush in to subsidize tools and production itself could be heavily subsidized to offset inefficiencies
11/thus a shorter timeframe of several years (three+) might be possible
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