US Govt Says Banned Chipmaking Equipment Still Ends Up in China

SMIC
(Image credit: SMIC)

Although the U.S. government has imposed extensive restrictions against the Chinese high-tech industry in a bid to prevent the latter from obtaining advanced chips and wafer fab equipment (WFE) made by American companies, Chinese entities can still get what they need using various loopholes, a report from the U.S.-China Economic and Security Review Commission has revealed. SMIC's high-volume production of 7nm chips illustrates that Chinese companies can definitely overcome U.S. sanctions.  

The measures imposed by the U.S. administration in Oct. 2023 have notably impacted China's artificial intelligence, high-performance computing, and semiconductor sectors, in general — but loopholes and China's adaptive strategies have undermined their overall effectiveness, reports The Register

The China export rules imposed last year require U.S. companies and individuals to secure licenses for selling equipment and technologies used in producing non-planar transistor logic chips on 14nm/16nm nodes and smaller, 3D NAND with 128 layers or more, and DRAM memory chips with a half-pitch of 18nm or less. These regulations also extend to foreign firms exporting U.S.-originated components.

However, tools that are used to make 28nm chips can be used in production of 5nm ICs and neither makers of WFE nor the U.S. government can control how these tools are used.

"With BIS using a 14nm 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 reads.

The report outlines a number of significant enforcement challenges and loopholes. For example, it shows how Chinese chipmakers are acquiring tools for producing chips that are only marginally behind the target technology nodes, bypassing the intent of the bans. They can still equip their fabs with fairly advanced tools and produce chips that are close to those being regulated. 

Another way Chinese companies have managed to continue producing advanced chips is by procuring tools from countries other than the U.S., before sales were restricted. Chinese companies were able to purchase advanced tools from Dutch and Japanese companies for about a year after the U.S. first imposed restrictions.

Perhaps the best example of how Chinese companies have been evading U.S. sanctions is Semiconductor Manufacturing International Co.'s high-volume production of the advanced Huawei HiSilicon Kirin 9000S application processor using its 2nd Generation 7nm process technology. The company can apparently produce a boatload of such chips using tools that it obtained before it was blacklisted and WFE that it managed to acquire after it was blacklisted (using various loopholes).

Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. 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.

  • RedBear87
    This is completely unexpected and I'm truly amazed! At this point the solution is obvious, the US needs to sanction the whole World. If sanctions don't work it's because you're not sanctioning enough people, consequences be damned. /s
    Reply
  • bit_user
    RedBear87 said:
    This is completely unexpected and I'm truly amazed! At this point the solution is obvious, the US needs to sanction the whole World. If sanctions don't work it's because you're not sanctioning enough people, consequences be damned. /s
    I think that's too simplistic. In any complicated human endeavor, you don't expect to get it 100% right the first time. If the sanctions are leaky, then iterate until the leaks are plugged.

    In terms of what the article cites, that does not mean increasing the geographical scope of the sanctions, but rather placing controls or restrictions which either eliminate exportation of tools that can be repurposed or ensuring they're degraded in a way that can't easily be overcome by the end user.
    Reply
  • ThomasKinsley
    bit_user said:
    I think that's too simplistic. In any complicated human endeavor, you don't expect to get it 100% right the first time. If the sanctions are leaky, then iterate until the leaks are plugged.

    In terms of what the article cites, that does not mean increasing the geographical scope of the sanctions, but rather placing controls or restrictions which either eliminate exportation of tools that can be repurposed or ensuring they're degraded in a way that can't easily be overcome by the end user.
    I suppose the main question is whether the leaks can be plugged. It all depends on how China obtained the equipment. If it can happen with this equipment then it begs the question whether China can procure more advanced tech, including machines dedicated for EUV lithography.

    Turning this back to the tech side of things, I certainly hope this doesn't result in the tech industry becoming more fragmented. We have enough trouble getting standards adopted as is.
    Reply
  • Li Ken-un
    Can we draw an analogy to cryptography here? “Outlaw encryption and only the outlaws will have encryption.”

    The idea is that only those who comply will not have it. Did anyone honestly believe that the incentive to possess the advanced fabrication technology would be outweighed by policy nay-saying?

    “No, sir. You may not have it. Please refrain from trying to have it.”
    “Why, by golly! I shall comply.”
    Reply
  • bit_user
    ThomasKinsley said:
    I suppose the main question is whether the leaks can be plugged. It all depends on how China obtained the equipment.
    This was covered in the article.

    ThomasKinsley said:
    If it can happen with this equipment then it begs the question whether China can procure more advanced tech, including machines dedicated for EUV lithography.
    Depends if they're dual-use, like the ones they obtained so far.

    ThomasKinsley said:
    Turning this back to the tech side of things, I certainly hope this doesn't result in the tech industry becoming more fragmented.
    That could certainly happen, but I don't think the lithography thing plays into it so much as when the former US administration banned any cooperation or support with Huawei, which prompted them to pour more resources into efforts like their Harmony OS project.
    https://en.wikipedia.org/wiki/HarmonyOS
    ThomasKinsley said:
    We have enough trouble getting standards adopted as is.
    Such as?
    Reply
  • bit_user
    Li Ken-un said:
    Can we draw an analogy to cryptography here? “Outlaw encryption and only the outlaws will have encryption.”

    The idea is that only those who comply will not have it. Did anyone honestly believe that the incentive to possess the advanced fabrication technology would be outweighed by policy nay-saying?

    “No, sir. You may not have it. Please refrain from trying to have it.”
    “Why, by golly! I shall comply.”
    No, I don't see how such an analogy would apply. The point of sanctions is to convince your allies to enforce them - not to convince the sanctioned party they should embrace the sanctions.
    Reply
  • Evildead_666
    The horse has bolted, locking the door with more locks now is pointless.
    It will only harm the US, as it has done until now.
    Reply
  • edzieba
    Li Ken-un said:
    Can we draw an analogy to cryptography here? “Outlaw encryption and only the outlaws will have encryption.”

    The idea is that only those who comply will not have it. Did anyone honestly believe that the incentive to possess the advanced fabrication technology would be outweighed by policy nay-saying?

    “No, sir. You may not have it. Please refrain from trying to have it.”
    “Why, by golly! I shall comply.”
    It's even worse than that: it's like placing sanctions on hammers used to build houses more than 3 stories tall, but freely allowing sales of hammers for building houses one or two stories tall. And both hammers are the same hammer.
    Reply
  • bit_user
    edzieba said:
    It's even worse than that: it's like placing sanctions on hammers used to build houses more than 3 stories tall, but freely allowing sales of hammers for building houses one or two stories tall. And both hammers are the same hammer.
    Not the best analogy, with a hammer being such a simple device.

    I'd suggest your analogy would be more apt if you'd have used cranes. A crane could have restrictions installed (or you just sell a shorter one) to prevent it being used to build buildings above a certain height.
    Reply
  • edzieba
    bit_user said:
    Not the best analogy, with a hammer being such a simple device.

    I'd suggest your analogy would be more apt if you'd have used cranes. A crane could have restrictions installed (or you just sell a shorter one) to prevent it being used to build buildings above a certain height.
    Also not a good analogy: the mask is what determines the minimum feature pitch, not the wafer scanner (outside of illuminant wavelength restrictions, and even then multi-patterning allows reduced feature scale with geometry dependency). The wafer scanner does not know the pitch of the mask installed, and there's not really a practical way to insert such a restriction without quixotic DRM pointlessness.
    Reply