The US has stepped up its restriction on China’s access to chipmaking equipment, expanding it from tools that make chips of 10 nm to 14 nm process technology, effectively cutting China’s ability to produce advanced chips.

Why it matters: A further ban on the Chinese chips industry would disrupt the supply chains of semiconductor producers worldwide, as the country is an essential part of the global semiconductor industry, according to Peter Wennink, the CEO of semiconductor giant AMSL.

Details: On July 29, Bloomberg cited sources from two primary semiconductor suppliers, Lam Research and KLA Corporation, saying that the US Department of Commerce had informed them to stop supplying products to mainland China for making chips under 14 nm in the past two weeks.

  • In early June, the US talked ASML and Nikon into not supplying devices, including deep ultraviolet (DUV) lithography machines, for advanced chip making to mainland China.
  • SMIC, a major Chinese chip contract maker, was previously able to import devices that can produce chips above 10nm, including DUV machines from ASML, with a license from the US authorities. 
  • Although the measures are targeted at limiting the ability of China to produce advanced chips, they could have a major impact on non-Chinese-owned foundries on the Chinese mainland, such as those run by Samsung and TSMC.
  • The tightening regulations are unlikely to affect storage chip makers, as these firms typically require less advanced processes. For instance, YMTC’s new storage chip launched this April uses a 20 nm process, according to Tech Insights.
  • DUV can potentially make chips of up to 5 nm with multiple exposure technology, but the costs are often prohibitive. The more advanced extreme ultraviolet (EUV) machine can produce chips under 7nm with only a single exposure, Netherlands-based media outlet Bits&Chips wrote in a 2021 report.

Context: The US has been restricting the sale of equipment to Chinese firms to develop chips since 2020 and has sped up its effort in recent months. Last week, the two branches of the US congress passed the $280 billion Chips and Science Act. In addition, the bill will subsidize US semiconductor manufacturers and innovation and hope to strengthen its competitiveness in the crown jewel of modern technology. 

  • The bill will provide $52 billion in subsidies for US chip makers and more than $100 billion in related technology investments. 
  • Firms that receive funds from the bill are forbidden from building or expanding factories in mainland China.

Ward Zhou is a tech reporter based in Shanghai. He covers stories about industry of digital content, hardware, and anything geek. Reach him via ward.zhou[a] or Twitter @zhounanyu.