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Washington is reportedly mulling import restrictions on Chinese chip companies. Photo: Reuters
TechTech War

Tech war: US mulls crippling ban on exports to Chinese chip makers, report says

  • The US is said to be weighing a ban on American firms selling advanced equipment to semiconductor producers in China
  • The rules could affect China’s top foundry, SMIC, as well as state-backed chip makers such as Hua Hong Semiconductor
US-China tech war
Che Pan
Che Panin Beijing
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The United States is considering banning American suppliers from selling advanced equipment to Chinese chip makers, a move that could hinder China’s drive towards technological self-sufficiency, according to a report by The Information on Monday.

The report, which cited anonymous sources, said the proposed rules would tighten the screws on Semiconductor Manufacturing International Corp (SMIC), China’s top chip foundry, as well as state-backed chip makers Hua Hong Semiconductor, ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Corp (YMTC), all of which rely on core US technology to various extents to fabricate chips.
SMIC, which was added to the US Commerce Department’s entity list in December 2020, is already banned from importing extreme ultraviolet lithography machines made by Dutch company ASML, which are necessary for producing advanced chips at 7-nanometre and below.

However, companies producing less advanced equipment involving US technologies can still sell to SMIC upon approval by Washington. SMIC has been looking into importing equipment for its new plants in Shenzhen and Beijing.

This is not the first time that SMIC has faced threats of harsher curtailment. In March, US Commerce Secretary Gina Raimondo said that Washington could take “devastating” action against SMIC and other Chinese chip makers if they defied US sanctions against Russia over the war in Ukraine.

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Hua Hong Semiconductor, CXMT, and YMTC – a subsidiary of Tsinghua Unigoup – are not on any US trade blacklist. However, the Financial Times reported two weeks ago that the US was looking into claims that YMTC violated sanction rules by providing chips to Huawei Technologies Co.

Any new US ban could be similar to those already in place, such as the restrictions on Huawei, said Arisa Liu, a semiconductor research fellow at the Taiwan Institute of Economic Research.

Further restrictions on US chip-making technology to Chinese companies could undermine the expansion of semiconductor production capacity in China.

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Over the past two years, China has stepped up its efforts in enhancing domestic semiconductor technology by providing the industry with incentives to use more home-grown technologies.
The move is designed to protect the integrity of the country’s semiconductor supply chain from tighter US sanctions, a protracted global chip shortage, and supply chain disruptions caused by the Covid-19 pandemic.

Despite the efforts, some analysts said it would be virtually impossible for China, or even strong semiconductor producers like Japan and South Korea, to build a chip supply chain that is completely free of any US-origin technology.

“We could see that the US is actively trying to unite its allies such as Japan and South Korea to form a semiconductor supply chain to exclude China,” Liu said. “A direct ban on equipment sales to certain Chinese chip makers is also another method aimed at the same goal.”
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