Semiconductor self-sufficiency drive under siege with new US export controls
China’s ambitious semiconductor self-sufficiency drive faces greater difficulties after Washington expanded the scope of US tech export controls targeted at its chip makers, analysts said.
The Bureau of Industry and Security (BIS), an agency under the US Department of Commerce, has implemented updates that further restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors used in military applications.
The updates add new licence requirements for items destined to Chinese chip foundries, which will face a “presumption of denial”. By comparison, those for Chinese chip fabrication facilities owned by multinationals will be decided on a case-by-case basis.
“A siege is forming,” said Arisa Liu, a fellow at the Taiwan Institute of Economic Research. “The intensified US tech export restrictions aim to strike at China’s abilities in supercomputing, AI [artificial intelligence] and semiconductor manufacturing.”
The United States is also imposing new licence requirements to export items used to develop or produce semiconductor manufacturing equipment and related items.
The tightened controls, however, establish a Temporary General Licence. This would minimise the short-term impact on the supply chain by allowing specific, limited manufacturing activities related to items destined for use outside China.
Still, China’s semiconductor self-sufficiency was expected to be worse off, research fellow Liu said.
The impact of the latest restrictions is likely to send more shock waves across China’s chip industry, providing a stern challenge to Beijing’s leaders on how to keep the nation’s hi-tech selfsufficiency programme on track.
Yesterday, shares of China’s major chip makers tumbled. Semiconductor Manufacturing International Corp, China’s largest, lost 3.4 per cent to HK$16.62, while Hua Hong Semiconductor sank by 9.6 per cent to HK$16.34. Naura Technology Group, China’s leading semiconductor equipment maker, closed down 10 per cent at 250.56 yuan in Shanghai.
The US sanctions had “filled the whole Chinese chip industry with a sense of chill” because Washington was using semiconductor technology as a tool to contain China’s progress, Gu
Wenjun, chief analyst at research firm ICwise, wrote in a note.
“There’s no possibility for reconcilement. Unprecedented challenges loom for China’s semiconductor industry,” Gu said.
The BIS also updated policies related to the Unverified List and the US export blacklist, known officially as the Entity List.
Yangtze Memory Technologies, for example, is expected to find it tougher to expand its non-Chinese customer base for memory chips under the latest restrictions, according to integrated circuit research firm TrendForce in a recent note. Yangtze Memory, China’s leading NAND flash maker, as well as DK Laser and Beijing Naura Magnetoelectric Technology were among the 31 entities recently added to Washington’s Unverified List.
The latest restrictions also expanded the scope of the US Foreign Direct Product Rule to include advanced computing and items such as supercomputers.
This is expected to make it harder for the 28 Chinese entities added to the US blacklist between 2015 and 2021 to obtain such foreign-produced items that contain US-origin technologies. Changsha Jingjia Microelectronics, which makes graphics processing units, was among the 28 added to the Entity List.