China Holds Emergency Talks Over U.S. Semiconductor Sector Crackdown

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China's Ministry of Industry and Information Technology (MIIT) has held talks with the country's semiconductor and supercomputer companies in a bid to assess the impact of sweeping U.S. sanctions against Chinese high-tech industry which came into effect last Tuesday. The government vows to financially support affected companies, but without plans on how to alleviate the effects of sanctions that bar select Chinese companies from U.S. technologies. 

Officials from the MIIT summoned executives from various semiconductor and supercomputer companies, including 3D NAND memory maker Yangtze Memory Technologies Co. and supercomputer maker Dawning Information Industry Co. better known as Sugon, to discuss the impact of American sanctions against China's chip and supercomputer sectors, reports Bloomberg

Many Chinese high-tech companies, including Huawei, Inspur, Sugon, and ZTE have historically relied on government-funded projects for growth, whereas chipmakers like Semiconductor Manufacturing International Co. and Yangtze Memory have both received investments from government-controlled funds and sold products to local companies. Sources with knowledge of the matter told Bloomberg that domestic IT market will provide sufficient demand for affected companies. The question is whether they can fulfil that demand. 

Both Sugon and YMTC were essentially eliminated from the global semiconductor and semiconductor production supply chains after the U.S. administration imposed sweeping sanctions against China. Sugon has been in the U.S. entity list since mid 2019 and therefore it cannot procure high-performance computing chips from American companies unless the latter get an appropriate export license from the U.S. Department of Commerce (DoC).  

Meanwhile YMTC cannot procure advanced American chipmaking tools to make 3D NAND with 128 or more layers. Furthermore, YMTC has been added to the unverified list (UVL) and unless the U.S. government specialists or auditors cannot verify that YMTC's products are not used by Chinese entities with military ties within 60 days, the 3D NAND maker gets into the entity list. Once YMTC is on the list, U.S. chip toolmakers as well as all companies that sell products or services featuring American technology will have to get an export license from the DoC to deal with YMTC. If the license is not granted, the company will be left without the necessary wafer fab equipment (WFE). 

Chinese high-performance computing (HPC) chip designers like Biren are not yet affected by the sanctions and the company can produce as many chips at it needs at Taiwan Semiconductor Manufacturing Co. (TSMC). However, the U.S. administration has enough tools to curb Biren's operations. 

In addition to restricting U.S. chip toolmakers to supply advanced WFE to Chinese companies, the U.S. government also restricted the ability of U.S. persons to 'support the development, or production, of ICs' at select PRC-located fabs without a license.

**Updated 10/21**
YMTC has denied any involvement in closed-door talks with Chinese government officials over U.S. sanctions.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.