China’s Chip Industry Braces for Further Sanctions With Concerns and Defiance

Among these already blacklisted, Yangtze Memory Technologies urged suppliers to point out “integrity” and deliver machinery parts it had already purchased. “We can’t get the components, which we have bought legally,” mentioned Nanxiang Chen, YMTC’s chairman and appearing CEO. The firm is China’s main maker of flash reminiscence chips. Such chips are important in all types of digital gadgets together with computer systems and smartphones.

His remark was a uncommon public acknowledgment of the challenges YMTC has confronted since being hit by U.S. sanctions late final 12 months.

In October YMTC was positioned on the Commerce Department’s “unverified record” as a company of concern. It was affected, too, by U.S. curbs on China’s chip sector, including restrictions on exports of any technology, tools or machinery that China could use to manufacture advanced semiconductors.

The curbs also restricted the ability of “U.S. persons” to assist the event or manufacturing of among the most cutting-edge chips in China. That led U.S. makers of semiconductor-manufacturing gear to withdraw staff who had been based mostly at YMTC to keep up extremely technical instruments.

In December, YMTC was moved to the Commerce Department’s “entity record,” meaning U.S. exporters need to obtain a license before selling the company goods or services.

In his speech Thursday, the opening day of the three-day Semicon China semiconductor-industry conference, Chen also suggested that tool makers buy back some of the equipment they have sold to YMTC. He didn’t elaborate on how well YMTC is maintaining operations under the sanctions.

Blacklisting YMTC is intended to prevent China from developing technologies that might give it an edge in defense or other areas that Washington deems critical to national security.

More measures targeting China’s semiconductor industry are likely. The Biden administration is considering further restricting exports to China of chips used in artificial intelligence, The Wall Street Journal reported. The Netherlands published new rules last week saying Dutch semiconductor companies will have to seek government permission before they can sell certain types of chip-making tools abroad.

Meanwhile, China said Monday that it is putting export restrictions on gallium and germanium, two minerals the U.S. says are critical to the production of semiconductors, missile systems and solar cells.

A frequent lament from the Chinese chip makers and researchers at the Shanghai event was that geopolitical tensions had ended a decadeslong era in which a global supply chain had grown and flourished.

Globally, semiconductor companies’ revenue reached $573 billion in 2022, according to SEMI, a global semiconductor-supply-chain industry body that organized the annual Shanghai event. That is expected to grow to $1 trillion by the end of the decade, SEMI said, fueled by demand for chips in cars and data centers and the rapid adoption of artificial intelligence across industries.

Whether the industry can keep up may depend on how geopolitical tensions play out. YMTC’s Chen said the sector had entered an “era of chaos and disorder.”

Employees on the exhibition cubicles of some Chinese software makers referred to as the U.S. restrictions unfair, citing the monthslong means of searching for import licenses with no assure of success.

An government from Semiconductor Manufacturing International, China’s greatest foundry operator, additionally on the U.S. blacklist, warned {that a} slowdown within the nation’s chip trade would weigh on the sector globally.

There was little seen signal of slowdown at Semicon, filled with guests milling round some 1,100 exhibitors. SEMI forecasts that between 2022 and 2026, China will account for greater than 1 / 4 of the 96 new chip-fabrication crops or main expansions deliberate globally for generally sized wafers of 200 mm and 300 mm.

Among the preferred cubicles had been these of Naura Technology Group and Advanced Micro-Fabrication Equipment, or AMEC, China’s prime makers of chip-manufacturing instruments. Naura’s merchandise embody etching instruments, which assist carve circuit patterns onto a semiconductor wafer, instruments to scrub the wafer and PVD gear used to deposit skinny steel movies. AMEC can be recognized for etching instruments.

A noticeable presence on the exhibition had been comparatively new, smaller Chinese suppliers that mentioned they’re creating merchandise to compete with these of dominant suppliers. Products included chip-testing instruments, the place the U.S.’s KLA at present dominates, and chemical compounds.

Forum audio system in addition to exhibitors mentioned that whereas the American restrictions had been painful, in addition they open alternatives for native gamers. If not for the restrictions, some native suppliers mentioned, chip makers wouldn’t have thought of utilizing their expertise.

“It’s not all dangerous for China, in that it might additionally give China an opportunity to develop,” mentioned Tsinghua University professor Shaojun Wei, who focuses on semiconductors.