Semiconductor Rules

Semiconductor Rules
​

​As we have noted over the past month or so, the Biden administration has been developing a set of new trade restrictions on semiconductors that are designed to extend those already imposed, with the intent of limiting China’s ability to compete in the world semiconductor markets and reduce China’s ability to develop a number of technologies, which the US government feels could be used to advance China’s military capabilities.  On Friday the US Bureau of Industry and Security/Office of Congressional and Public Affairs, a part of the US Department of Commerce, issued a statement on the implementation of new export controls on advanced computing and semiconductor manufacturing to the PRC and an additional 31 entities to the “Unverified List”, essentially a list of companies that the DOC says remain ‘unverified’ as to their ‘bona fides’ due to foreign government non-compliance.  Companies on the “Unverified List” get moved to the Entities List if they remain unverifiable for an extended period of time.  Nine entities on the “Unverified List” were removed, having met the requirements.
The new rules are as follows:

1. Adds certain advanced and high-performance computing chips and computer commodities to the Commerce Control List (CCL)
2. Adds new license requirements for items destined for a supercomputer or semiconductor development or production end use in the PRC – Supercomputer defined as 100 or greater 64-bit Petaflops od 200 or more 32-bit petaflops that is in a 4’ x 4’ x 6.5’ or smaller rack
3. Expands the scope of foreign-produced items subject to license requirements to twenty-eight existing entities on the Entity List that are located in the PRC (below).
4.  Adds certain semiconductor manufacturing equipment and related items to the CCL (below)
5. Adds new license requirements for items destined to a semiconductor fabrication “facility” in the PRC that fabricates ICs meeting specified items.
   1. Licenses for facilities owned by PRC entities will face a “presumption of denial,”
   2. Facilities owned by multinationals will be decided on a case-by-case basis. The relevant thresholds are as follows:

i.Logic chips with non-planar transistor architectures (I.e., FinFET or GAAFET) of 16nm or 14nm, or below
ii.DRAM memory chips of 18nm half-pitch or less

1. NAND flash memory chips with 128 layers or more.
2.  Restricts the ability of U.S. persons to support the development, or production, of ICs at certain PRC-located semiconductor fabrication “facilities” without a license – Support is defined as shipping, transmitting, or transferring (in country).
3. Adds new license requirements to export items to develop or produce semiconductor manufacturing equipment and related items
4. Establishes a Temporary General License (TGL) to minimize the short-term impact on the semiconductor supply chain by allowing specific, limited manufacturing activities related to items destined for use outside the PRC.

The new rules are a bit specific as to what equipment has been added but the idea is that any tools that aid in the development of semiconductors that are above ‘generic’ levels are being included, specifically those related to cobalt, which has promise in reducing the power requirements of semiconductors, an important part of supercomputers where massive numbers of processors are used.   While these rules began going into effect on October 7, with restrictions on personal development support beginning on 10/12 and advanced computing rules on 10/21, we expect the list of tools to continue to expand as the DOC delves further into potential advances in semiconductor process technology that can be used to advance supercomputing and AI.
While the exact language is not specified, exceptions to the ‘assumed denial’ rule that covers entities and equipment specified in this and previous orders, license exceptions (aka “Temporary General License”) will be given to “minimize the short-term impact on the semiconductor supply chain by allowing specific, limited manufacturing activities related to items destined for use outside of the PRC.”, which we assume to mean that non-Chinese companies operating in China will be able to produce and export semiconductors to customers outside of China, although the ‘temporary’ wording would suggest that the US government is encouraging those manufacturers to move production to the US or other locations outside of China.  Discussions between South Korean (Samsung Electronics (005930.KS) and SK Hynix (000660.KS) and the US government have been ongoing to clarify specific issues given their production locations on the Mainland.
The full rule (146 pages) is here:  https://public-inspection.federalregister.gov/2022-21658.pdf
Chinese semiconductor companies on the entities list (partial):

• Beijing Institute of Technology
• Beijing Sensetime Technology Development Co., Ltd. (0020.HK) (Case-by-case review)
• Changsha Jingjia Microelectronics Co., Ltd. (300474.CH)
• Chengdu Haiguang Integrated Circuit
• Chengdu Haiguang Microelectronics Technology
• China Aerospace Science and Technology Corporation (CASC) 9th Academy 772 Research Institute
• Dahua Technology (002236.CH)
• Harbin institute of technology
• Higon (pvt)
• IFLYTEK (002230.CH) (Case-by-case review)
• Intellifusion (pvt) (Case-by-case review)
• Megvii Technology (pvt) (Case-by-case review)
• National Supercomputer Center Zhengzhou
• National Supercomputing Center Changsha/Guangzhou, Jinan, Shenzhen, Tianjin, Wuxi
• National University of Defense Technology
• New H3C Semiconductor Technologies Co., Ltd (HPE JV)
• Northwestern Polytechnical University
• Shanghai High-Performance Integrated Circuit Design Center; Sugon
• Sunway Microelectronics
• Tianjin Phytium Information Technology
• Wuxi Jiangnan Institute of Computing Technology
• Yitu Technologies (pvt) (Case-by-case review)

 
List of Added Semiconductor Manufacturing Equipment (Partial)
 

• Equipment for depositing cobalt through electroplating processes
• CVD for cobalt or tungsten deposition (<3nm)
• Any tool that can fabricate Tungsten metal contacts between 100⁰C and 500⁰C
• Any tool that conducts a plasma process that includes Hydrogen, Oxygen, Cobalt, Tungsten, and Ammonia derivatives at certain temperatures
• PVD deposition tools for Cobalt at 10nm or less
• Atomic Layer Deposition tools depositing organometallic aluminum and Titanium Halide
• Any tool capable of depositing Titanium Nitride or Tungsten Halide
• Sputtering tools for Cobalt deposition
• Tools that can fabricate copper interconnects that include cobalt or ruthenium
• Any equipment capable of area selective deposition of a barrier or liner using an organometallic compound.