Biden administration prepares to bring hammer down on Chinese chipmakers

Wait? Is the plan to ban them from buying parts they can already make?

The Biden Administration is reportedly prepping another round of sanctions in a bid to further hamper Chinese chipmakers.

Citing sources familiar with the matter, Reuters says the Commerce Department is poised to enact export bans on semiconductor manufacturing equipment necessary to produce chips smaller than 14nm to the Middle Kingdom.

The findings stem in part from letters on intent provided to three prominent US companies responsible for producing chipmaking equipment — KLA Corp, Lam Research, and Applied Materials — advising them they are forbidden from exporting equipment to China without explicit licensing from the Commerce Department. Reuters says these companies have confirmed the letters, though the Commerce Department has yet to take definitive action.

The next bout of restrictions are also expected to officially enforce an export ban on advanced AI accelerators to China by the likes of AMD and Nvidia.

These bans, announced late last month, restricted the export of Nvidia’s A100 and H100 AI accelerators as well as AMD’s MI250X GPUs, which power the Department of Energy’s Frontier supercomputer.

And that may not be the end of it. Unnamed sources have reportedly told Reuters that the commerce department may go even further enact even stiffer restrictions of semiconductor exports to China.

Chinese memory vendors may be among those targeted next. In early August, Reuters reported the Biden Administration was eyeing a ban on equipment required to produce memory technologies with more than 128 layers to China.

That’s never mind the fact that Yangtze Memory Technologies Co., a major Chinese memory vendor, is already producing 176-layer NAND flash modules, and is already working toward a 196-and 232-layer NAND modules.

But such a ban is unlikely to ingratiate the US with Samsung and SK-Hynix, two South Korean chipmakers with substantial memory production centered in China. Both chipmakers have announced expansions in the US, but an export ban of this nature could negatively impact their memory businesses.

All talk and no trouser?

Whether any of this will make a meaningful difference to China’s semiconductor manufacturing capability is up for debate.

US semiconductor equipment vendors have been barred from exporting tools necessary to manufacturer chips 10nm or smaller for the better part of two years. Despite these efforts. SMIC, China’s largest state-sponsored foundry operator, has still managed to produce 7nm components as of this spring.

Adding more fuel to the fire, a Wall Street Journal report from showed that the Department of Commerce was ill-equipped to actually enforce these bans.

The report found that 94 percent of the export licenses requested by tech companies were approved. The effect being that despite posturing, the same department responsible for controlling the export of sensitive technologies isn’t actually enforcing their own policy.

As it stands, corruption within the CCP may be a more effective at hamstringing itself. The past few months has seen China’s Big Fund, rocked by multiple allegations of corruption.

Since July, China’s graft watchdog, the Central Commission for Discipline Inspection, has opened opened investigations into five more current and former executives responsible for the country’s technology fund citing “serious violations of discipline and law.” ®