【World Express】Effectiveness of Anti-China Chip Rules in Doubt

  New restrictions from the U.S. Department of Commerce (DoC) on global exports of advanced chipmaking technology aimed at Chinese chip designers like Alibaba and Baidu are “overblown” and unlikely to blunt the growth of Chinese companies, at least according to one longtime industry observer.

  On Aug. 12, the DoC’s Bureau of Industry and Security (BIS) established new controls over exports of technology from several countries that the BIS said are essential to U.S. national security. The measure is the latest volley in a tech war between the U.S. and China that started under the administration of former U.S. President Donald Trump, and has continued under President Joe Biden.

Export restrictions of ultra wide band gap semiconductor substrate and ECAD technology corresponding to GAAFET

  The technologies include two substrates of ultra-wide bandgap semiconductors—gallium oxide and diamond—as well as electronic computer-aided design (ECAD) software for the development of chips with gate-all-around field-effect transistor (GAA FET) structures, according to BIS. Such technologies can be used in military and civilian applications, the BIS said.

  While the BIS didn’t name countries whose imports stand to be negatively impacted by the controls, the measures are aimed at one adversary, Paul Triolo, senior VP for China at Albright Stonebridge, said in an interview with EE Times.

Paul Triolo, Senior Vice President for China Affairs, Albright Stonebridge

  Triolo, who has advanced degrees in international relations and electrical engineering, has spent more than 25 years in senior positions in the U.S. government.

Any adverse impact on the technological innovation of MOCVD in Japan and Europe?

  Triolo, who has advanced degrees in international relations and electrical engineering, has spent more than 25 years in senior positions in the U.S. government.

  Karl Breidenbach, associate director at Boston Consulting, told EE Times that the BIS’s announcement to further tighten U.S. export controls on equipment and materials may well impede the advancement of next-generation wide-bandgap (WBG) technologies for power electronics and leading-edge logic.

  “Multi-lateral export controls will further increase complexity and create an additional burden for industrializing gallium oxide and diamond-based semiconductors at scale,” Breidenbach said. “It is likely that the pace of innovation could be negatively impacted in fields like MOCVD (metal organic chemical vapor deposition) epitaxy, where Japanese and European companies recently had made great strides.”

  Chinese aluminum producers have a dominant share of refined gallium oxide, which is used as the base material for wafers. Japan leads in prime-grade gallium oxide wafers, he added.

Impact on global interdependence

  There is a global interdependence which will be affected by the new rules,” Breidenbach said.

  The measures are an escalation leading up to an expected announcement of further controls on exports of deep ultraviolet (DUV) lithography equipment to China, according to an analyst who requested anonymity. Chinese chipmakers like Semiconductor Manufacturing International Corp. (SMIC) are currently allowed to import DUV tools.

  The operations of overseas chipmakers operating in China would also be affected by the new rules, the analyst said. South Korea’s SK Hynix will need to “rethink” plans to upgrade existing chip facilities in China with GAA technology, the source said.

  Triolo said there is “considerable pressure from Congress on the Department of Commerce to show that it is controlling new and emerging technologies that have potential military applications for export to Chinese firms. The general justification is Beijing’s Military Civilian Fusion (MCF) initiative, and the potential for advanced semiconductor technology to be used in weapons systems or supporting systems, such as satellite networks. The Commerce Department is considering this now as leading foundries, such as Taiwan Semiconductor Manufacturing Corp. (TSMC) and Samsung, are beginning to roll out commercial processes at the 3 nm and eventually 2 nm level that will leverage the performance advantages provided by GAA technology.”

  MCF is the Chinese Communist Party’s effort to develop the world’s most technologically advanced military, according to the U.S. State Department. A key part of MCF is the elimination of barriers between China’s private sector and its military. The Party is implementing this strategy by acquiring and diverting the world’s cutting-edge technologies—including through theft—in order to achieve military dominance, according to the State Department.

Chinese manufacturers with continuous growth

  Hutcheson said his EDA comments are based on private conversations with industry executives. China’s best, most visible EDA players are Hejian, Amedac, Aerdai, and X-Epic, he added.

  He said he heard Chinese firms have reached “a level where they are very competitive at 28 nm and above and competitive down to 14 nm. Given their speed of development, it’s my personal judgement they will hit state-of-the-art in three to four years, providing SMIC can reach 3 nm and 2 nm technology in the same timeframe.”

  Triolo said the broader view of the Biden administration is that “new controls are needed to prevent certain Chinese domestic foundries from operating at 14 nm or below processes and for processes greater than 128 layers for memory production.”

  Chinese memory chipmaker Yangtze Memory Technologies Co. (YMTC) planned to begin making NAND chips with 128-layer technology this year, the company’s former acting chairman said in late 2020.

  U.S Senator Charles Schumer and other Democratic leaders in the U.S. have called for YMTC to be blacklisted, according to Reuters. Schumer’s office didn’t respond to attempts by EE Times to confirm the report.

  “The still-unstated goal is to keep China two to three generations behind U.S. and other western companies in the manufacturing space,” Triolo said. “But the actual impact of new controls being considered, including for deep ultraviolet lithography, previously uncontrolled, is to give the U.S. government veto power over what any new foundry in China can produce.”

  ASML, located in the Netherlands, is the world’s sole supplier of EUV and DUV lithography tools.

ASML's TWINSCAN NXE: 3400B EUV lithography equipment is used for mass production of 7nm/5nm EUV

Source: ASML

  “Global commerce is driven by innovation—new ideas, and novel ways to apply old ones,” said Thea D. Rozman Kendler, assistant secretary of the Commerce for Export Administration, in prepared remarks. “BIS is vigilant in assessing the development of new technology and whether it may be used for civil and military purposes. Export controls are most effective when multilaterally imposed.”

MILITARY-USE CONCERNS ‘OVERBLOWN’

  “The vast majority of applications of these technologies is for civilian commercial uses, for smartphones, IoT devices, semiconductors optimized for AI algorithms, etc.,” Triolo said. “The general nods to potential military uses of semiconductors based on the technology appear to be overblown.”

  “On what Commerce should do, obviously that is the purview of the current administration and is part of a larger China strategy, which remains not very well defined in terms of goals,” he added. “On the specific approach that industry favors for technology-related controls, it would be narrow controls with clearly defined national security justifications.”

  The new restrictions will potentially impact the world’s most advanced chipmakers.

  “TSMC, Samsung, and Intel will eventually deploy GAA processes at the most advanced nodes,” Triolo said. “As long as Chinese fabless design companies can use these foundries to manufacture semiconductors, China can continue to remain at the cutting edge of semiconductor deployment. This is happening as other U.S. export controls are crippling the ability of domestic Chinese foundries to manufacture at advanced nodes, due to restrictions on advanced lithography systems, which are also required to manufacture at 3 nm and 2 nm.”

  The new controls follow press reports that China’s SMIC is making chips at the 7 nm node, which surpasses the capability of any U.S. chipmaker, Doug Fuller, an associate professor at Copenhagen Business School, told EE Times.

“Commerce has been fighting a rear-guard action against broad controls, and the panic around SMIC’s supposed 7 nm has not made Commerce’s job any easier,” Fuller said.