According to TechNews on October 18th, The Biden administration has once again tightened restrictions on chip exports to China, and this includes Nvidia’s advanced AI chips.

In a recent press release, the U.S. government announced a renewed restrictions on exports of advanced computing and semiconductor manufacturing products to China. Notably, this includes Nvidia’s cutting-edge AI chips, which will be impacted and could potentially face restrictions on sales to China. The motive behind this action by the Biden administration is to prevent China from bolstering its military capabilities by accessing advanced U.S. technology.

Apart from Nvidia, chip products from industry giants like Intel and AMD might also encounter hurdles in their journey to China. In addition to the actual chips, products from semiconductor equipment manufacturers such as Lam Research, KLA, and Applied Materials may also face increased limitations when destined for China.

These new restrictions, as revealed by the U.S. government, are even more stringent than previous limitations on chip exports. Nvidia’s A800 and H800 chips are among those falling under these tightened restrictions. As a direct consequence, Nvidia’s stock price took a sharp dip, decreasing by nearly 5% on Tuesday.

Following the recent U.S. government ban, Nvidia’s spokesperson, Ken Brown, promptly assured that the company strictly adheres to all relevant regulations. Nvidia is committed to supporting a wide array of products across diverse industries. Given the global demand for Nvidia’s offerings, it’s anticipated that these restrictions will have no immediate, substantial impact on Nvidia’s financial performance.

In a bid to curtail China’s potential access to U.S. chips through third-party channels, these limitations now extend to include the overseas subsidiaries of Chinese firms. Furthermore, the updated regulations expand the list of countries subject to additional export license requirements for advanced chips to over 40 more nations. This expansion is driven by the concern that these countries might transfer chips to China and their presence on the U.S. arms embargo list.

Notably, the interim final rule revises ECCN 3A090 and 4A090 and enforces extra licensing prerequisites for exports to China and the D1, D4, and D5 country groups. These groups include nations like Saudi Arabia, the United Arab Emirates, and Vietnam, though Israel remains excluded.

To safeguard against China’s potential acquisition of U.S. chips through alternative routes, these restrictions have been extended to encompass overseas subsidiaries of Chinese corporations and involve 21 other countries.

However, reports from foreign media indicating that this new U.S. regulation will exempt certain consumer chips used in laptops, smartphones, and gaming consoles. Nonetheless, some chips may still necessitate prior notification and licensing from the U.S. government to be exported.

It’s noteworthy that the U.S. government’s list of newly restricted entities includes two prominent local GPU companies, Moore Thread Technology and Biren Technology. Following the U.S. ban, both firms promptly issued statements of strong protest.

Moore Thread expressed their strong objection, saying, “We are deeply concerned about the inclusion of Moore Thread in the Entity List by the U.S. Department of Commerce. Our company is actively engaging with various stakeholders, and we are assessing the impact of this development.”

Biren Technology also issued a statement, stating, “We vehemently oppose the U.S. Department of Commerce’s actions and will proactively appeal to relevant U.S. government departments, urging them to reconsider their stance.”
(Image: Nvidia)

(Data: US BIS)

As the United States intensifies its chip embargo against China, the Chinese Academy of Engineering (CAE) has released an annual report for technological development. This report serves as a strategic guide to navigate the embargo and promote autonomous technological growth comprehensively.
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On October 7, 2022, the U.S. government imposed export regulations restricting China’s access to semiconductor technology. In particular, the sanctions pertained to manufacturing equipment required in the production of 16nm/14nm or more advanced logic chips (FinFet, GAAFET), 18nm or more advanced DRAM chips, and NAND Flash with 128 or more layers. It’s evident that the U.S. intends to restrict China’s semiconductor manufacturing to 1Xnm. Moving forward, 28nm processes are likely to be included in the next set of regulations as some equipment used in manufacturing 28nm nodes can also be utilized in more advanced processes.

TrendForce predicts that upcoming U.S. export regulations will further focus on 28nm processes. Not only can 28nm manufacturing equipment be used in more advanced processes, but tight restrictions have forced Chinese companies to focus their efforts on expanding their 28nm operations. 28nm processes can be used to produce a large variety of other products: SoCs, ASIC AI chips, FPGAs, DRAMs, NAND Flash, ISPs, DSPs, Wi-Fi chips, RF components, Driver ICs, MCUs, CISs, DAC/ADC chips, PMICs, and other core components in a wide range of applications. If the U.S. allows Chinese companies to accelerate the expansion of their 28nm processes, China’s importance in the supply chain for terminal products will continue to climb — ultimately setting back the U.S’s efforts to decouple itself from China.

China still unable to fully manufacture 28nm chips domestically as expansion exhibits signs of slowing down

China cannot fully rely on domestic production for their 28nm semiconductors. If the U.S. chooses to move forward with restricting China’s access to 28nm manufacturing equipment, expansion will surely grind to a halt. China currently possesses equipment that is able to clean, backgrind, etch, and sediment for 16nm/14nm or more advanced processes. However, this is not enough for China to achieve semiconductor autonomy. Semiconductor manufacturing is relatively complicated as it involves thousands of processes; Chinese factories are only involved in a few of the processes — the majority of which depend on American and Japanese factories. All in all, with China’s semiconductor industry largely focused on 28nm/40nm and more mature processes, it will be difficult for them to achieve semiconductor autonomy for processes more advanced than 28nm by 2028.

According to a Financial Times report on October 24, 2022, as the U.S. Department of Commerce moves to restrict U.S. personnel from supporting semiconductor manufacturing “facilities” located in China to develop or produce chips without Department approval, Yangtze Memory Technologies Co., Ltd. (YMTC) has taken steps to avoid violating the ban and allowed a number of core employees with U.S. citizenship to resign.

YMTC is a domestic NAND flash memory chip manufacturer in China. In 2018, it only possessed the ability to produce 32-layer MLC 64Gb products. At that time, mainstream products offered by international manufacturers were 92-layer/96-layer TLC 256Gb/512Gb. Since then, YMTC has continued to catch up in terms of technology. By 2020, it had the capacity to mass-produce 128-layer TLC 512Gb products. The company’s new X3-9070 product, released in 3Q22, is estimated to have 232 stacked layers, equaling major international manufacturers if only in the amount of layers.

U.S. personnel played a key role in the process of YMTC’s continuous technological breakthroughs including Simon Yang, CEO since 2016. On the eve of the latest U.S. sanctions, Simon Yang resigned as CEO to become managing director. After the ban came into effect, a number of core personnel of U.S. nationality who assisted in the development of process technology resigned in succession. As sanctions continue to roil, technological development at YMTC may be delayed as a result.

Under the influence of the U.S. ban, YMTC not only faces brain drain, but will also experience difficulties expanding mass production of mainstream products and next-generation products. Since the U.S. Department of Commerce not only placed restrictions on equipment utilized to produce 128-layer (or more) NAND flash memory chips, but also maintains a “presumption of refusal” when reviewing the export of such equipment to China, YMTC may be unable to obtain sufficient equipment to produce next-generation 232-layer products or expand the production of mainstream 128-layer products.

As international NAND flash memory chip manufacturers continue to mass-produce products with more than 200 layers and move towards 300+ layers, if YMTC cannot manufacture products over 128 layers because the company continues to be limited by talent and equipment restrictions, the technological divide between YMTC and major international manufacturers will widen again and its recent efforts to keep up with technology will also come to nothing.

（Image credit: Unsplash）

The U.S. Department of Commerce announced new semiconductor restrictions on October 7 in the United States. In addition to existing restrictions on the logic IC sector, this new update extends to the memory category. In addition to Chinese-funded enterprises, the extent of these restrictions stipulates foreign-owned production centers located in China will also need to apply for approval on a case-by-case basis in order to continue to obtain manufacturing-related equipment. The US ban has far-reaching effects and may extend to the global chip industry.

U.S. ban hobbles China’s semiconductor industry, affecting foundry and memory industries

The U.S. Department of Commerce announced a series of chip export control measures on the 7th, which mainly restrict China’s ability to obtain advanced computing chips, develop supercomputers, and manufacture advanced semiconductors.

However, relevant restrictions also prohibit third-country companies such as TSMC from using US-made equipment to service Chinese customers without U.S. approval in some cases. According to TrendForce, a market research agency, the ban will expand the scope of these restrictions. In the future, it will target American companies, including CPUs, GPUs, and AI accelerators, used in HPC fields such as datacenters, AI, and supercomputers. All of these items will require review before export to China. In addition, foundries may no longer be able to manufacture any of the above-mentioned HPC-related chips for any Chinese IC design house.

TrendForce believes, regardless of whether the client is a Chinese or American IC design house, most HPC-related chips are currently manufactured by TSMC with mainstream processes at the 7nm, 5nm, or certain 12nm nodes. In the future, whether the situation is American factories no longer being able to export to the Chinese market or Chinese factories being unable to initiate projects and mass produce wafer starts, it will all have a negative impact on the future purchase order status of TSMC’s 7nm and 5nm processes.

In terms of memory, according to the new specifications announced by the U.S. Department of Commerce, the DRAM portion of sanctions will be limited to the 18nm process (inclusive) and equipment must be reviewed by the Department before import. This move will greatly restrict or delay the sustainable development of China’s DRAM sector and China’s memory manufacturers will be the first to bear the brunt of these sanctions.

TrendForce indicates that CXMT possesses the largest memory market share for a Chinese company in the domestic Chinese market. Since 2Q22, the company has been committed to moving from the 19nm process into the 17nm process. Although the purchase of machinery to fulfill future needs had been accelerated before the ban, volume is still insufficient. CXMT continues to build new plants, including Phase 2 in Hefei and SMBC (SMIC Jingcheng), which is in discussion with SMIC. All of these projects will face difficulties in obtaining equipment in the future.

The C2 plant of SK hynix’s DRAM production center in Wuxi is also affected by the restriction order. The factory accounts for approximately 13% of the world’s total DRAM production capacity and its process has evolved to 1Ynm and more advanced nodes.

In terms of NAND Flash, TrendForce indicates that the import of NAND production equipment into China will be further restricted in the future, especially for equipment used in the manufacture of product of 128 layers and above (inclusive), requiring prior approval before import. It is estimated that this ban will significantly impact the long-term plans of China’s YMTC to upgrade its factory campuses, restrict YMTC from further expanding its customer base as the ban may will greatly limit non-Chinese customers’ adoption and consideration of YMTC products, and impact Samsung’s Xi’an plant and Solidigm’s process migration plan in Dalian.

U.S. temporarily exempts several suppliers as ban disrupts supply chains

In order to mitigate excessive impact of the U.S. imposed China chip ban on the semiconductor industry, the U.S. recently exempted several semiconductor companies (including in the United States, Taiwan, and South Korea) from certain restrictions.

According to Wall Street Jounal, Intel, SK Hynix, and Samsung have all received one-year exemptions. SK Hynix also issued a statement stating that the company has completed negotiations with the U.S. Department of Commerce and has obtained approval to provide equipment and items required for the development and production of DRAM semiconductors in Chinese manufacturing plants without additional licensing requirements. The authorization period is one year.

In addition, Nikkei Asia News also quoted sources as saying that TSMC has also received a one-year exemption to continue ordering U.S. chip manufacturing equipment to expand its Chinese plant. According to people familiar with the matter, the U.S. government has assured TSMC that the equipment will be shipped to its Nanjing fab, which means the company’s China’s development plan remains unchanged and is progressing smoothly.

（Image credit: iStock）