U.S. Wants China's SMIC to Stop Making 14nm Chips

When the U.S. Department of Commerce (DOC) restricted access of China's largest contract chipmaker Semiconductor Manufacturing International Corp. (SMIC) to fab equipment used to make10nm-class chips, it was considered a tough but not too severe move. Now the U.S. government is mulling restricting China from producing logic chips using a 14nm-class fabrication process. 

The DOC is examining the possibility of prohibiting the exportation of chipmaking tools to companies in China that can make logic chips using 14nm-class manufacturing nodes and thinner, according to a Reuters report that cites five people familiar with the matter. The only company in China currently producing chips using its 14nm fabrication process is SMIC, which has been doing so since late 2019. 

What is not completely clear from the report is whether the DOC wants to ban SMIC from getting tools used to make semiconductors on its 14nm node and thinner, or if it wants to ban SMIC from getting any tools at all because it is capable of making chips using its 14nm technology. 

Currently, American companies can sell equipment good enough to build 14nm chips to SMIC without any export licenses from the DOC and other agencies. If the U.S. government decides to restrict SMIC's access to advanced chipmaking tools, companies like Applied Materials and Lam Research will have to apply for an export license every time they deal with SMIC. The application will be reviewed with a presumption of denial.

An official for the U.S. DOC did not confirm that the department was discussing 14nm-related export restrictions for SMIC but confirmed that it was continuously reviewing the ongoing situation. 

"With respect to semiconductor-related export license applications in particular, (Commerce) and the other reviewing agencies ... consider a variety of factors in making licensing decisions, including the technology node for the proposed export," the spokesperson for the Department of Commerce is reported to have said. 

Because SMIC could not access extreme ultraviolet (EUV) lithography tools due to the Wassenaar Arrangement, the firm began the development of its 12nm, N+1, and N+2 process technologies that relied purely on deep ultraviolet (DUV) lithography and were aimed primarily at inexpensive chips that did not require a high transistor density. Now, both N+1 and N+2 nodes are considered sub-10nm fabrication processes, so SMIC had to cancel their development. 

When SMIC was barred from manufacturing tools advanced enough to make chips using its 10nm-class (and sub-10nm-class) nodes in late 2020, the company said it would focus on developing advanced packaging technologies to make sophisticated multi-chiplet designs out of tiles produced on 14nm and thicker nodes. That would enable Chinese chip designers to build sophisticated and capable processors with tens of billions of transistors even without using an advanced process technology. In addition, the company announced multi-billion dollar expansion plans that would triple the output of chips made on advanced nodes.

To a large degree, advanced packaging technologies could be SMIC's way to work around the U.S. export restrictions. As a result, China would gain access to advanced computing capabilities that could be used for military purposes.

The U.S. administration certainly understands SMIC's options and risks that it brings to America and its allies, so it wants to further crackdown China's access to sophisticated chipmaking tools.