Tag Archives: chips

China Brings WTO Case Against U.S. Chip Export Curbs

Technology, ,

China initiated a dispute against the U.S. at the World Trade Organization (WTO) over Washington’s sweeping semiconductor export curbs that look to cut the world’s second-largest economy off from high-tech components, CNBC reported.

According to CNBC, the Chinese Ministry of Commerce confirmed the trade dispute in a statement on Monday and accused the U.S. of abusing export control measures and obstructing normal international trade in chops and other products. It said the WTO dispute is a way to address China’s concerns through legal means.

In October, the U.S. imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in an effort to prevent American technology from advancing China’s military power. The rules would require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in artificial-intelligence, calculations and supercomputing – crucial technologies for modern weapons systems, senior administration officials said.

The Wall Street Journal reported that Beijing will use the WTO’s dispute settlement mechanism to challenge U.S. export controls on products such as chips to China to defend its rights and interests, its Ministry of Commerce said in a statement posted to its website. The ministry said it was responding to a media question in making the announcement.

According to The Wall Street Journal, the rules being challenged require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in advanced artificial-intelligence calculations and super-computing. Biden administration officials have said the rules are needed to prevent China from building up its military and developing new, state-of-the-art weaponry.

The Wall Street Journal also reported that a spokesman for the Office of the U.S. Trade Representative confirmed that the U.S. has received a request for consultations from the People’s Republic of China related to certain U.S. actions affecting semiconductors. “As we have already communicated to the PRC, these targeted actions relate to national security, and the WTO is not the appropriate forum to discuss issues related to national security,” he said.

Reuters reported that the regulations made by the U.S. aimed at kneecapping China’s semiconductor industry, prompting a complaint from a top China trade group.

“China takes legal actions within the WTO framework as a necessary way to address our concerns and to defend our legitimate interests,” said a statement by China’s commerce ministry, its diplomatic mission in Geneva relayed.

According to Reuters, the so-called request for consultations is the first step in a long procedure at the global trade body. The United States has blocked appointments to the WTO’s top ruling body on trade disputes, meaning some rows never get settled.

It sounds like the complaint made by China is going to languish at the WTO, especially since the request appears to have a long procedure attached to it before a decision is made. As such, China shouldn’t assume that they are going to get “next-day-service” from the World Trade Organization.

Apple Will Use Chips Built In The U.S. Arizona Factory

Apple,

Apple CEO Tim Cook confirmed that Apple will buy U.S.-made microchips at an event in Arizona on Tuesday, where President Joe Biden also spoke, CNBC reported. Cook said Apple would buy processors made in a new Arizona factory, according to a video from the event.

According to CNBC, the chip factories will be owned and operated by Taiwan Semiconductor Manufacturing Company, the biggest foundry company with over with over half of the global market share. TSMC produces the most advanced processors, including the chips in the latest iPhones, iPads and Macs.

The plants will be capable of manufacturing the 4-nanometer and 3-nanometer chips that are used for advanced processors such as Apple’s A-series and M-series and NVIDIA graphics processors.

According to CNBC, TSMC currently does most of its manufacturing in Taiwan, which has raised questions from U.S. and European lawmakers about securing supply in the potential event of a Chinese invasion or other regional issues. Chip companies such as Nvidia and Apple design their own chips but outsource the manufacturing to companies like TSMC and Samsung Foundry.

The Verge reported that the Phoenix, Arizona plant include not only Apple, but also AMD and NVIDIA as customers. The new facility means a more secure supply of chips and quicker production timelines. The chip fabricator, TSMC, also said today that it would start construction on a second factory in Phoenix next year, increasing the site’s annual output.

According to The Verge, TSMC is a dedicated foundry, meaning it builds the chips designed by other companies. Apple, AMD, and NVIDIA are among its largest customers, and even Intel relies on TSMC to make the most advanced processors.

The first Phoenix fab will make 4nm processors (improved from the originally disclosed 5nm), with production slated to begin in 2024. The second fab will come online in 2026 and produce 3nm chips, which are the smallest and most complex processors in production today.

Engadget reported that the combination of the two plants will together make about 600,000 chip wafers per year. TSMC is spending $40 billion on the factories, but they’ll be partly subsidized by the U.S. government through the CHIPS and Science Act meant to incentivize US semiconductor manufacturing.

According to Engadget, while the plants won’t come online for two years, news of the expansion comes at an appropriate time. Apple has warned of iPhone 14 Pro manufacturing setbacks due to China’s COVID-19 policies. In theory, American facilities would have reduced the impact of those restrictions. Although many parts could still be made overseas even after TSMC’s expansion, there could soon be a greater chance of Apple devices reaching your door in a timely fashion.

Overall, I think this might be a good thing for American workers because the two plants are going to need to hire a lot of people. This can also be good for American companies that rely on the chips the plants will make, and also for consumers who use the product that require those chips.

American Executives Working In China Affected By U.S. Chip Restrictions

Information,

American workers hold key positions throughout China’s domestic chip industry, helping manufacturers develop new chips to catch up with foreign rivals. Now, those workers are in limbo under new U.S. export control rules that prohibit U.S. citizens from supporting China’s advanced chip development, The Wall Street Journal reported.

At least 43 senior executives working with 16 publicly listed Chinese semiconductor companies are American citizens, according to an examination of company filings and official websites by The Wall Street Journal. Many of them hold C-suite titles, from chief executive to vice president and chairman.

On October 9, the Biden Administration imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in an effort to prevent American technology from advancing China’s military power. Those restrictions require licenses for exports of many advanced technologies to Chinese entities deemed to be working against the U.S. national security interests.

The Wall Street Journal reported that for many senior executives at Chinese companies, the rule will likely force them to decide between their jobs and their U.S. citizenship or permanent resident status. The rules require all U.S. persons to apply for a license to continue working in Chinese advanced chip development.

According to The Wall Street Journal, Beijing-based Naura Technology Group co. and Dutch equipment maker ASML Holding NV, have suspended their American employees from continuing work that could now be restricted while they seek clarity on the rules, the companies have said.

Other companies affected by the restrictions include AMEC, one of China’s largest chip-making equipment vendors, GigaDevice Semiconductor, which makes flash memory chips, and KingSemi Co., which produces the most advanced coating and development equipment in China and supplies giants including Taiwan Semiconductor Manufacturing Co.

Bloomberg reported that Chinese President Xi Jinping pledged his nation will prevail in its fight to develop strategically important tech, underscoring Beijing’s concern over a US campaign to separate it from cutting-edge chip capabilities.

According to Bloomberg, Xi said the world’s No. 2 economy will speed up innovation in areas that are vital to “technology self-reliance,” adding that “China will move faster to launch a number of major national projects that are of strategic, big-picture, and long-term importance”. Bloomberg reported that Xi did not give details on those efforts.

While it is currently unclear exactly what China intends to do in regards to chip-making, it is obvious that the U.S. restrictions are taking their toll on not only China, but also on some American workers who are employed by China’s technology companies. At a glance, it appears that the Biden administration’s restrictions are working as intended.

China’s Chip Industry Set For “Deep Pain” From U.S. Export Controls

Technology

Two years after the US hit Huawei with harsh sanctions, the Chinese technology group’s revenue has dropped, it has lost its leadership position in network equipment and smartphones and its founder has told staff that the company’s survival is at stake, Financial Times reported. Now, China’s entire chip industry is bracing for similar pain as Washington applies the tool tested on Huawei much more broadly.

Recently, the Biden Administration imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in an effort to prevent American technology from advancing China’s military power. Those restrictions require licenses for exports of many advanced technologies to Chinese entities deemed to be working against the U.S. national security interests.

Financial Times also reported that Washington is barring US citizens or entities from working with Chinese chip producers except with specific approval. The package also strictly limits exports to China of chip manufacturing tools and technology that Chinese companies could use to develop their own equipment.

The controls on semiconductor equipment are also a potent weapon against mainstream manufacturers and leading-edge chip producers, Financial Times reported. According to analysts at the Bank of America, the equipment restrictions will affect logic chips designed in the past four to five years and Dram chips designed after 2017.

Bloomberg reported that since advanced semiconductors power information-age societies, the U.S. is seeking to hinder Chinese economic dynamism and military alike. Washington’s new policy is a warning to Beijing about the long reach of U.S. power in a globalized economy. It also reflects a sobering recognition that the US can’t win its competition with China simply by running faster; it must also slow Beijing down.

According to Bloomberg, this isn’t the first time Washington has used its influence on semiconductor supply chains as a geo-economic weapon. Beginning under President Trump, Washington sought to kneecap the Chinese tech behemoth Huawei Technologies Co. by denying it the cutting-edge chips it needed to dominate the world’s 5G telecommunications networks.

But that was a very targeted denial campaign meant to cripple a specific company that represented an extraordinary national security threat. The new approach is broader: It is technological containment, pure and simple.

Overall, it sounds like China is going to have a difficult time obtaining the chips it needs for manufacturing, which is the intended purpose of the U.S. exports restrictions. The Biden administration appears to be taking things much farther than the Trump administration did. I think Bloomberg got it right when stating that the U.S. can’t win against China by running faster – it needs to slow Beijing down.

U.S. Restricts Semiconductor Exports

Technology,

The U.S. imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment Friday in an effort to prevent American technology from advancing China’s military power, The Wall Street Journal reported.

The rules will require U.S. chip makers to obtain an license from the Commerce Department to export certain chips used in advanced artificial-intelligence calculations and supercomputing – crucial technologies for modern weapons systems, senior administration officials said.

According to The Wall Street Journal, the U.S. already requires licenses for exports of many advanced technologies to Chinese entities deemed to be working against U.S. national-security interests. Friday’s move expands that to include exports of crucial cutting-edge chips and equipment that can’t be obtained elsewhere. The rule will allow the U.S. to block foreign-made chips that are manufactured with U.S. technology, the officials said.

The restrictions are some of the broadest the U.S. has ever enacted against China’s chip industry, veering from previous actions that often targeted individual companies and a narrower subset of technology.

The New York Times reported that the Biden Administration on Friday announced sweeping new limits on the sale of semiconductor technology to China, a step aimed at crippling Beijing’s access to critical technologies that are needed from everything from supercomputing to guiding weapons.

According to The New York Times, the moves are the clearest sign yet that a dangerous standoff between the world’s two major superpowers is increasingly playing out in the technological sphere, with the United States trying to establish a stranglehold on advanced computing and semiconductor technology that is essential to China’s military and economic ambitions.

The New York Times also reported that companies will no longer be allowed to supply advanced computing chips, chip-making equipment and other products to China unless they receive a special license. Most of those licenses will be denied, though certain shipments to facilities operated by U.S. companies or allied countries will be evaluated case by case, a senior administration official said in a briefing Thursday.

The Verge reported that the decision follows months of increased investment by the U.S. in domestic and semiconductor manufacturing. In August, President Joe Biden signed the $280 billion CHIPS and Science Act, providing $52 billion in subsidies to boost companies choosing to build chip manufacturing plants in the U.S.

Overall, this seems like a good plan for the United States. It appears that the CHIPS bill is intended to encourage American companies to make chips here at home, while also making it harder for China to obtain chips made in the United States.

U.S. To Crack Down On Chip And Tool Exports To China

Technology

The Biden administration plans next month to broaden curbs on U.S. shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said, according to Reuters.

Reuters reported that the Commerce Department intends to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies – KLA Corp, Lam Research Corp, and Applied Materials Inc. Reuters says this information came from three people speaking on the condition of anonymity.

The companies publicly acknowledged the letters, which forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain Commerce Department licenses.

According to Reuters, a spokesperson for the Commerce Department on Friday declined to comment on specific regulations but reiterated that it is “taking a comprehensive approach to implement additional actions… to protect U.S. national security and foreign policy interests,” including to keep China from acquiring U.S. technology applicable to military modernization.

The Hill reported that semiconductor chips power most electrical systems and machines, from appliances to computers, vehicles, and modern weapons.

According to The Hill, over the summer, the U.S.passed the Chips and Science Act. The full name of this act is the CHIPS and Science Act of 2022. It refers to legislation signed into law by President Biden on August 9, 2022. The act originally was set at $52 billion, the passed legislation invests nearly $250 billion on a combination of semiconductor and other scientific research and development. An additional $20 million appropriation goes to provide enhanced security for members of the U.S. Supreme Court and their families.

Investopedia posted key points of the CHIPS and Science Act of 2022:

  • Nearly $250 billion in semiconductor and scientific research and development
  • The Act seeks to implement previously authorized programs under the CHIPS for American Act 2021 and authorize the largest publicly funded R&D program in the country’s history.
  • The legislation seeks to return the United States to dominance in chipmaking and to combat supply chain issues that have arisen from the country’s decline in science and technology.
  • Includes at $20 million appropriation to provide security for members of the U.S. Supreme Court and their families.
  • Once fully implemented, the CHIPS and Science Act of 2022 will represent the largest publicly funded five-year investment in research and development in the country’s history.

The Hill reported that chipmaking company Nvidia, based in California, said the U.S. began requiring a license to export chips that are better than or equal to its A100 graphics card to Russia, China, and Hong Kong. A similar restriction was reportedly applies to the company Advanced Micro Devices.

According to The Hill, China has demanded the U.S. drop the requirement, which affects data centers, artificial intelligence systems and other equipment that requires highly advanced chips.

Personally, I highly doubt that the U.S. is going to drop the requirement to have a license to export American made chips to China simply because China asked for that. The point appears to be an effort to make the United States more self-sufficient by allowing certain American chip makers to continue producing chips. I think this will enable Americans to more easily access the technology that the chips are made for, and also to reduce shipping delays.