US updated semi export control to have little effort in stopping China semi development, says DIGITIMES Research

Eric Chen and Emily Liao, DIGITIMES Research, Taipei 0


Following the announcement to impose export restrictions aimed at blocking China's semiconductor industry development in October 2022, the US government released multiple new measures directed at China's semiconductor industry, including the expansion of the curbs on high-performance chip and advanced semiconductor manufacturing equipment (SME) exports announced in October 2023, according to DIGITIMES Research's latest report on the US semiconductor export sanctions.

DIGITIMES Research believes that although the added control measures may close the loopholes in the existing export restrictions, they will only slow down China's semiconductor industry development but will hardly stop China from building up its semiconductor strength.

In October 2023, the Bureau of Industry and Security (BIS) under the US Department of Commerce (DOC) released a new tranche of rules, adding 13 China-based GPU chipmakers to the Entity List, including performance density as a new technical parameter, expanding licensing requirements to additional countries and tightening controls on advanced computing chip and SME exports to China.

However, before the governments stepped up their export controls, China's semiconductor firms had gotten their hands on semiconductor chips and equipment during the window period before the regulations took effect. On top of that, cracking down on illegal channels such as black markets or smuggling can be challenging, thus threatening the effectiveness of the US government's new export restrictions, the report shows.

It is noteworthy that as the US exerts its efforts to deter China's semiconductor advances, it also considers the global semiconductor supply chain stability. It has approved the validated end-user (VEU) status for the semiconductor plants of Samsung Electronics and SK Hynix in China, allowing them to operate without disruption. TSMC is also applying for VEU status.

DIGITIMES Research expects the VEU program to mitigate the geopolitical pressure on the three leading foundries' operations in China. Their future capacity expansions in China remain subject to the control of the national security guardrails for the CHIPS Act.