What the US is doing to nip Chinese progress on chips. Report Ft
The US has blacklisted many Chinese companies, blocking exports of critical chips and technologies. The Financial Times article
In China's southern tech hub of Shenzhen, workers at chip maker start-up PXW Semiconductor Manufactory have started to panic after the US placed their company on a trade blacklist last week. Writes the Financial Times .
“Most of the team leaders and executives are in an emergency meeting, but the rest of us are not allowed to discuss such a 'sensitive' issue,” said one employee, adding that the door to their boss's office it remained closed on Friday, a day after the United States added PXW to the "entity list" along with 35 other Chinese firms.
US suppliers are barred from exporting to companies on the list without approval, which in many cases should be withheld. Analysts said the latest blacklist is a "cleanup" to plug loopholes in sweeping measures imposed in October that allow Washington to block China's access to high-end chips and the talent and tools to make them.
"It's a game of trump," said Douglas Fuller, an expert on China's chip industry at Copenhagen Business School. "Every time Washington proposes sanctions, new projects spring up which they then try to block".
The United States began using export controls to contain China's technological rise, adding Huawei to the entity list in May 2019. Since then, Washington has added many more Chinese technology firms, including surveillance companies, manufacturers manufacturers, drone developers, smartphone makers and institutions suspected of supplying the People's Liberation Army.
Some of the companies targeted last week, including PXW, are just starting to develop their semiconductor businesses and are therefore more vulnerable than established companies like Huawei.
“The US government has a handle on China's semiconductor supply chain and knows who's priorities are and who has future potential,” said Brady Wang, an analyst at Taiwan-based research firm Counterpoint.
PXW enjoys strong support, including funding from the Shenzhen government and the leadership of a former Huawei executive. The company has ordered equipment from various US companies that should arrive next year, but now it may never receive it, according to two company employees.
Another unexpected addition to the list is Hefei-based Core Storage Electronic, a company founded by former employees of Taiwanese chip design firm VIA Technologies to develop an in-house alternative to Intel-based PC processors. “It's a nasty surprise,” said an engineer from Hefei Core Storage. "No one expected we'd be on their radar."
A Western trade official said the US may have discovered the Hefei-based firm was working on processors suitable for supercomputers or supporting China's development of advanced memory chips – sectors targeted by the October checks.
"The United States is developing an ever more detailed understanding of Chinese industry, including actors we would have considered obscure," the official said.
But the list also contains more important companies.
Yangtze Memory Technologies, China's largest memory chip maker, had already been hit hard by the October checks. The company halted its expansion and asked US equipment makers to pay back down payments on previously ordered tools, a YMTC senior engineer said.
“At that time, we could still consider falling back to [less advanced] chips, but now our fate is pretty much sealed,” he said, referring to the near-impossibility of getting equipment licenses to expand production. after being inserted into the entity list.
YMTC had already suspended talks with Apple to supply memory chips for iPhones in China. Research firm TrendForce predicts it could be forced out of the market for advanced 3D Nand flash products by 2024, as it has lost critical support from tool makers to compete with rivals on this particular memory technology.
Also in Washington was a major developer of chip-making equipment: Shanghai Micro Electronics Equipment, which represents China's only hope of developing its own lithography machines, the critical tool for manufacturing advanced chips currently dominated by the Dutch firm ASML.
The company's lithographic machines are based on imported components and have never worked in mass production. “There is still a long way to go,” said a Shanghai official who managed the SMEE development project. But the official stressed that the company has trained teams of experienced personnel to replace ASML field workers who provided services but then withdrew due to US export controls.
“SMEE doesn't have US personnel like other Chinese chip equipment makers,” Fuller said. “Thus, the checks on US people included in the October measures are less effective.”
Another key addition is the Shanghai Integrated Circuit Research and Development Center, a company believed to be linked to Huawei's efforts to ramp up chip production domestically. Huawei denies its involvement.
"The ICRD has been expecting this for a long time," said the Western trade official. “We expected it to be blacklisted for two years, because the United States will try to crack down on any company that comes close to Huawei's chip development projects.”
None of the companies named in this article responded to a request for comment.
The list also targets Chinese development of high-performance chips. The list features chip design firm Cambricon Technologies and its nine subsidiaries. It also subjects them and their incubator at the Chinese Academy of Sciences to the "foreign direct products rule," which prevents them from obtaining supplies or services that contain a certain amount of US technology.
Cambricon was funded by Alibaba and the Shanghai government before listing on China's technology-focused Star Market in 2020. It sources its intellectual property from UK-based Arm and design tools from US-based vendors Cadence and Synopsys. It also relies on Taiwan's TSMC to manufacture its chips.
“If friction between China and the United States escalates … it could have a significant negative impact on the company's future product development and supply chain,” Cambricon said in its latest fundraising document.
According to analysts, this fate could await other Chinese startups. “There's a lot more going on on the chip design front,” Fuller said.
(Excerpt from the press release of eprcommunication)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/stati-uniti-restrizioni-aziende-chip-cina/ on Sat, 24 Dec 2022 07:04:52 +0000.