New U.S. sanctions cut off China from advanced chips and equipment for their production

New U.S. sanctions cut off China from advanced chips and equipment for their production

The United States authorities, as predicted, have completed a week of expansion of sanctions against the Chinese semiconductor industry, and have also restricted the supply of supercomputer components to the PRC; in the latter case, any components that allow Chinese clients to create a supercomputer with a capacity of over 100 petaflops will also be banned; chip production equipment in China will also be available in a limited range.

According to Reuters, the new regulations prohibit the supply to China from any country in the world of components released using technologies of American origin if they can be used to create a computational system with a productivity of more than 100 petaflops, covering an area of not more than 600 m2. Experts estimate that such a restriction would harm many Chinese companies that set up data processing centres for civilian applications.

Of the 31 Chinese companies and organizations that were added to the list yesterday, 28 were already under U.S. sanctions, just now, for exporters, the licensing and negotiation process will be restarted. If, within 60 days, a Chinese company on the new list can prove to the US authorities that it does not abuse imported components, it has a chance of rehabilitation.

In the event that a suspected Chinese company is unable to allow American auditors to enter its businesses or refuse to do so, it will automatically be placed on the blacklist. US exporters will find it difficult to work with such companies, each of the contracts will have to apply for a special export licence, and for such a Chinese counterparty, the US Department of Commerce will rely on the "presumption of guilt" in granting licences.

The list of companies that are not allowed to receive equipment from the United States for the production of advanced semiconductor components still includes YMTC, which is the largest Chinese producer of solid memory. Founded in 2016, it is now just one step closer to world leaders in terms of its technological capabilities. The new U.S. sanctions prevent YMTC from purchasing equipment that can be used to produce a 3D NAND chip with more than 128 layers.

With regard to exports of chips to China, the new rules will enter into force on 21 October. The US reserves the right to block the supply to the PRC of any components that can be used in advanced computing systems, including artificial intelligence solutions. TSMC, for example, will have to stop the production of Chinese-developed server system processors if they were created using American-based technologies and software. In any case, as TSMC uses appropriate United States-made equipment, it will have to stop servicing such Chinese clients.

As already mentioned, the export to the PRC of equipment that allows the production of 14-Nm integrated chips using the FinFET transistors structure will be prohibited. For the operating memory chip, it is prohibited to supply equipment that can be produced using 18 nm or more modern technology. In the case of hard memory, the number of layers in the chip should be limited to no more than 128. According to the logic of the US authorities, such restrictions should leave the Chinese semiconductor industry at the current level of technological development.

Also, US citizens are prohibited from providing services to Chinese clients on the above-mentioned list, and the supply to China of components that allow local producers to produce lithographic equipment to produce chips that meet more advanced criteria than those listed in the preceding paragraph will be limited. US officials note that the measures taken can be effective only if the foreign policy partners of the country express solidarity in restricting the supply of relevant goods to China. Nearly the entire world depends on technologies of American origin, but there are rare exceptions that would not be subject to US export control rules. Ideally, the United States authorities would like to cut off this channel of supply to the PRC as well.