US reconsiders restricting China's chip supply

March 30, 2020 //By Peter Clarke
US reconsiders restricting China's chip supply
The United States is reportedly reconsidering changing regulations to restrict global sales of ICs to China – and to Huawei in particular – as US-China tension rises under pressure of the Covid-19 pandemic.

The idea of changing regulations so that any chips made with US manufacturing equipment or software – effectively all complex ICs – must be licensed by the US for export to China, was floated last month (see US considers taking control of global chip exports ). However, President Trump appeared to reject the possibility at that time.

Reuters has now reported that senior officials within the Trump administration have agreed to new measures to restrict the global supply of chips to Huawei.

The regulation that was up for amendment is the Foreign Direct Product Rule, which subjects some foreign-made goods based on US technology or software to US regulations.

Although the leading manufacturer of lithography is European – ASML Holdings – a chip production line includes many different types of equipment and almost none of the lines are without equipment from US suppliers such as Applied Materials, KLA and Lam Research. And US companies Cadence Design Systems and Synopsys are the leading suppliers of EDA software.

Reuters said one of its sources said the rule-change is aimed at stopping TSMC from making chips for Huawei's HiSilicon chip subsidiary.

The report said it remains unclear whether President Trump will approve the rule change which could hurt US companies as well as TSMC and Huawei.

It also remains unclear what technology thresholds the US might impose as the basis for granting or denying export permission. The intention would appear to be deny China access to leading-edge silicon and hence prevent Huawei from making its smartphones and 5G infrastructure, while allowing US companies, TSMC and others to sell chips made on older manufacturing process technologies.

Related links and articles:

US considers taking control of global chip exports

US should take control of Ericsson, Nokia, says politician

Huawei stockpiling chips, expecting tighter US sanctions

TSMC says not fazed by lowering of 'dual-use' threshold

US lobbied hard to deny China EUV lithography


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