Semiconductor Industry: China received US equipment for advanced chips despite restrictions: Report

NEW DELHI: Despite attempts to curb China’s advances in the US semiconductor industry, Chinese companies are buying up US chipmaking equipment to make advanced semiconductors, reported news agency Reuters citing a report.
The annual report, spanning 741 pages and issued by the US-China Economic and Security Review Commission, criticizes the export restrictions implemented by the Bidenadministration in October 2022.The restrictions aim to prevent Chinese chip manufacturers from accessing US chipmaking tools intended for the production ofadvanced chips at the 14-nanometer node or below.
With the Commerce Department using the 14-nanometer restriction limit, “importers are often able to purchase the equipment if they claim it is being used on an older production line, and with limited capacity for end-use inspections, it is difficult to verify the equipment is not being used to produce more advanced chips,” the report stated as per Reuters.
The report comes at a time when the United States is meticulously probing how Chinese telecommunications giant Huawei managed to develop a sophisticated 7-nanometer chip for its Mate 60 Pro smartphone, using China’s leading chipmaker SMIC, which occurred despite the export restrictions announced the previous year.
In 2019 and 2020, both Huawei and SMIC were included in a trade restriction list, theoretically preventing US suppliers from supplying certain technology to these companies.
Observers of China’s actions had previously speculated that SMIC might have produced the chip using equipment acquired before the October 2022 regulations. However, the report indicates that SMIC had alternative means of obtaining the required equipment from overseas.
The report revealed that China stockpiled equipment by taking advantage of the lag time between the United States October 2022 rules, and Japan and the Netherlands’ similar moves in July and September of 2023 respectively.
According to the document between January and August 2023, China imported $3.2 billion (RMB 23.5 billion) worth of semiconductor manufacturing machines from the Netherlands, a 96.1% increase over the $1.7 billion (RMB 12 billion) recorded over the same period in 2022.
“China’s imports of semiconductor equipment from all countries totalled $13.8 billion (RMB 100 billion) over the first eight months of 2023”, the report added.
While the report doesn’t provide a specific recommendation to address the deficiencies in US regulations, it calls on Congress to mandate an annual assessment.
The General Accountability Office would conduct this evaluation within six months, with the findings later made public. The focus of this assessment would be on gauging the effectiveness of export controls on chipmaking equipment destined for China.
Established in 2000, the US-China Economic and Security Review Commission’s purpose is to deliver an annual report to Congress. This report assesses the national security implications arising from the economic connections between the United States and China, offering recommendations for government action.


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