US Prepares Broader Crackdown on Chinese Chipmakers

The United States Department of Commerce is considering a ban on Chinese companies selling advanced chip manufacturing equipment, The Information reported on Monday. This ban, which may be drafted within a few months, will target companies including Hua Hong Semiconductor, Changxin Memory Technologies and Yangtze Memory Technologies.

It is worth noting that Hua Hong Semiconductor has been invloved in the fields of auto-grade insulated-gate bipolar transistors (IGBTs) and IGBT wafers. This suggests that the unsolved shortage of automotive semiconductors may become more serious with the introduction and implementation of the ban.

In fact, the ban being considered by the US Department of Commerce is not only aimed at Chinese companies – it also may involve all firms with factories in the Chinese mainland.

The report pointed out that chip companies such as SK Hynix of South Korea, Infineon of Germany, NXP of the Netherlands, and Texas Instruments of the United States all have factories in China. Although they are all foreign-funded factories, they will also face the same export control rules as Chinese factories. They are, meanwhile, also important suppliers of automobile chips.

The new ban will restrict US raw material suppliers from providing materials to Chinese companies, and it is expected that companies such as Applied Materials, Lam Research and KLA Corp. will be significantly affected. Last year, the sales of these three companies in China totaled $14.5 billion, accounting for one third of the total revenue.

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At the same time, the US Department of Commerce hopes to formulate a set of rules similar to those applicable to Semiconductor Manufacturing International Corporation (SMIC) to restrict other semiconductor companies. In other words, they will be allowed to continue producing chips with large processes and old technology, because if all manufacturing is banned, it will do more harm to the US companies.

In addition, the US Department of Commerce may persuade chip manufacturers in Japan, the Netherlands and other countries to adopt similar rules to “ensure that Chinese chip manufacturers cannot avoid sanctions by purchasing equipment from other countries.”