The US aims to block the construction of new advanced chip fabs in China and countries of concern like Russia.
Here is what you need to know…
US To Fund Building Of Advanced Chip Fabs!
The US Congress just passed the historic CHIPS and Science Act (HR 4346) – a massive $280 billion bill designed to bolster innovation and tech hubs in the United States.
The legislation passed with a Senate vote of 64-33, and a House vote of 243-187, approving :
- $76 billion of funding to revive and boost chip production in the United States
- $81 billion for the National Science Foundation over 5 years, for research, equipment and STEM education
- Almost $10 billion for the National Institute of Standards and Technology
TSMC, Intel and Samsung are expected to benefit from the billions of dollars of funding, which would subsidise their construction of new advanced chip fabs in the United States.
US To Block New Advanced Chip Fabs In China!
There is however a big caveat in the legislation that the White House is expected to sign – any company that receives funding will be barred from building new advanced chip fabs in China and other countries of concern, like Russia.
The CHIPS and Sciences Act specifically bars companies that receive federal funding from “materially expanding” production of chips more advanced than 28 nanometres (28 nm) in countries of concern like China and Russia, for 10 years.
28 nm chips are not state-of-art, with production first starting more than 10 years ago – in 2011. However, they are still used in many applications, and China is free to keep producing these chips.
This move though will essentially limit development of advanced chips in China, by blocking foreign chipmakers from investing in more advanced fabs.
Intel had earlier lobbied hard against this move. In late 2021, Intel wanted to expand production in China but was pressured to sell its Dalian wafer plant to South Korea’s SK Hynix. Intel now only has chip packaging and testing facilities in China.
But that changed, and now Intel CEO Pat Gelsinger is a big proponent of the bill, even suggesting that it might forego building its Ohio mega fab and shift it to Europe if the legislation did not pass.
Currently, the only semiconductor companies investing in fabs in China are Samsung and TSMC. So if they choose to accept US funding, both companies will have to stop building fabs that can produce chips that are more advanced than 28 nm.
Of the potential recipients of US funding, TSMC is the only company making relatively advanced chips in China. Its Nanjing fabs currently make 28 nm and more advanced 16 nm chips.
Unless TSMC spurns US funding, it won’t be able to invest in more advanced fabs in China. This will force China to rely on its own SMIC to develop more advanced chipmaking technologies.
Unless China is somehow able to develop its own EUV technology, it’s pretty much end game for more advanced chip production in China… for ten years.
US Quietly Expands Chip Equipment Ban To Fabs In China
In addition to the looming CHIPS Act, the US government also expanded its ban on the sale of machines for fabricating advanced chips.
The US government had earlier banned the sale of tools that allow China to manufacture chips at 10 nm or smaller. That ban was just extended to include tools that would allow the manufacture of chips 14 nm or smaller.
American equipment makers like LAM Research and KLA Corp. have received letters about this expanded ban, which appears to be limited to logic chips (like computer processors), but not memory chips.
According to the US Commerce Department, the move was meant to impair China’s ability to manufacture advanced chips :
The Biden Administration is focused on impairing PRC efforts to manufacture advanced semiconductors to address significant national security risks to the United States.
However, this move appears to be merely officiating what is already being practiced – the US Commerce Department had already declined many licences to sell 14nm fab equipment.
The Biden Administration is also pushing the Netherlands and Japan to ban ASML Holdings NV and Nikon Corp from selling advanced chip making equipment to China.
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Dr. Adrian Wong has been writing about tech and science since 1997, even publishing a book with Prentice Hall called Breaking Through The BIOS Barrier (ISBN 978-0131455368) while in medical school.
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