In early October the US Department of Commerce announced a set of new chip export controls (FDPR). From now on US companies may not export advanced chips or related manufacturing equipment to mainland China without government approval, and chips manufactured in other countries using US technology fall under the same rules. This post tries to work through what those specific rules may bring.
The new rules are basically the same as the Commerce Department notices NVIDIA and AMD disclosed in early September, just written up as a formal document. Some of the rules that had not been disclosed before include:
- Restricting US persons from supporting the development or production of integrated circuits at certain semiconductor manufacturing "facilities" located in China without a license;
- Adding new license requirements for items destined to semiconductor manufacturing "facilities" in China that fabricate integrated circuits meeting the specified criteria. Facilities owned by Chinese entities face a "presumption of denial".
The first point has a very large impact. It is well known that the core team members at leading domestic semiconductor startups studied and worked in the US, and most of them hold a US green card or US citizenship. That means those engineers either give up their US status or leave the company.
As for the "presumption of guilt" in the second point, it makes it harder for these startups to get US technology or find overseas foundry capacity. The result is that raising money will get much harder for mainland semiconductor startups. Investors have to look carefully at whether the company they back can actually get the licenses, otherwise there is a risk of designing a chip that cannot be taped out or put into production.
The more complicated effects come from the blanket US export controls on advanced process nodes:
- The global consumer electronics market will be caught up in it, from phones to PCs, meaning every consumer electronics product traded in Huaqiangbei in Shenzhen.
- US and Chinese semiconductors decouple completely. Even if some company does obtain a Commerce Department license later, China's determination to take US content out of its semiconductor industry entirely will not change again.
- In the short term mainland semiconductors will go backwards quickly, and the bubble of the past two years will burst completely.
- In the long term, the mainland semiconductor community needs to find an entirely new, US-free technical path to work around the limits of the existing platforms. Whether that succeeds depends on how wise mainland policymakers turn out to be.
Appendix:
A partial list of US-citizen founders and executives at mainland semiconductor companies
- Montage Technology (澜起科技): GM Stephen Kuong-lo Tai
- Amlogic (晶晨股份): Chairman John Zhong, the GM, and 2 deputy GMs.
- GigaDevice (兆易创新): Vice Chairman Shu Qingming, Deputy GM Cheng Taiyi; Konfoong Materials (江丰电子): GM Jie Pan; LION Microelectronics (立昂微): Deputy GM Wang Yaozu
- AMEC (中微公司): Chairman Yin Zhiyao, Deputy GM Du Zhiyou
- 3PEAK (思瑞浦): Chairman ZHIXU ZHOU, Deputy GM FENG YING, key employee HING WONG
- Maxscend (卓胜微): two deputy GMs
- StarPower (斯达半导): Chairman Shen Hua, Deputy GM Hu Wei
- Piotech (拓荆科技): Chairman Lyu Guangquan, GM Tian Xiaoming, two deputy GMs
- ACM Research Shanghai (盛美上海): Chairman HUIWANG, 1 deputy GM, 1 director, CFO
- Anlogic (安路科技): 1 director
- Vanchip (唯捷创芯): CTO FENG WANG
- Focuslight (炬光科技): CTO Chung-En Zah
- Halo Microelectronics (希荻微): Chairman Tao Hai, GM NAM DAVIDINGYUN
- SmartSens (思特威): Chairman and GM Xu Chen; ASR Microelectronics (翱捷科技): a deputy GM
- Bestechnic (恒玄科技): Chairman Liang Zhang, Director XiaoJun Li
- VeriSilicon (芯源股份): Chairman Dai Weimin, Vice President Dai Weijin