The United States is reportedly fine-tuning its chip export curbs, with plans to publish updated rules around the one-year anniversary of the first salvo of its chip war on China announced on October 7, 2022.
China has been notified in recent weeks about the updated measures, an unnamed US official told Reuters on Monday.
The report did not say what specific changes would be made but any new rules not ready for publication by early October would be published after the Asia-Pacific Economic Cooperation (APEC) to be held on November 15-17 in San Francisco to avoid jeopardizing a potential meeting between Chinese President Xi Jinping and US President Joe Biden.
Some Chinese commentators expect that the US will ease some of its chip export rules in early October in a bid to improve Sino-US relations.
“The fine-tuning of the US sanctions will be aimed at stabilizing the bilateral relations between the US and China,” a Guangdong-based columnist speculates in an article published on October 3. “The US chooses to relax its curbs, instead of tightening them, showing that it recognizes China’s advancement in chip technologies.”
He says some Western countries were shocked by the successful launch of Huawei Technologies’s Mate60 Pro smartphone in late August, which appeared to show China is accelerating the development of its own chip and lithography technologies despite US sanctions.
The Guangdong columnist also speculates that the US may allow its companies to ship more high-end chips and chip-making tools to China, in a potential cooling of the chip war. If so, he adds, many downstream Chinese companies will benefit while certain local chipmakers may be less motivated to develop their own technologies.
On October 7, 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) implemented a series of targeted updates to its chip and chip-making equipment export controls in the name of protecting US national security.
At the time, it said Chinese firms will face a “presumption of denial” if they apply for export licenses to build facilities to make logic chips with non-planar transistor architectures (FinFET or GAAFET) of 16nm or 14nm. It said license applications from facilities owned by multinationals will be approved on a case-by-case basis.
The BIS also banned the export to China of artificial intelligence (AI) chips with speeds of 600 gigabytes per second, which include Nvidia’s A100 chips.
Last November, Nvidia tailor-made A800 chips that work at 400 gigabytes per second for Chinese markets. But media reports said in June this year that Washington might next ban A800 chip shipments to China.
While speculation is hot and heavy among the Chinese commentariat, it is still unclear how the US will fine-tune its chip export rules.
Over the past two months, both the US and China have sought to de-escalate the chip war. The Biden administration unveiled milder-than-expected investment curbs against China’s high technology sectors in August while Beijing granted licenses last month for US firms to import China’s gallium and germanium, metals used in the chip industry.
“Although the US eased its sanctions against China’s chip sector, it does not mean that the US has completely given up its strategic goal to suppress China,” a Zhejiang-based writer speculates in an article. “This is just a phased adjustment.”
He writes as some South Korean chipmakers have been caught in the crossfire of the US-China chip war, Washington may want to ease some of its curbs on China in order to bolster Seoul’s support for its plan to boost the American chip sector.
He speculates that once the US, Taiwan and South Korea consolidate a strong partnership in the global chip supply chain, the US will move to intensify its curbs against China.
In May, China banned local telecom firms from using chips made by US chipmaker Micron. In June, the US asked South Korea to avoid cashing in on Beijing’s ban on Micron by shipping more chips to China.
On September 22, the US Commerce Department released the final rule implementing the national security “guardrails” of the bipartisan CHIPS and Science Act. Under the rule, South Korean and Taiwanese firms can apply for US subsidies to establish foundries in America but in exchange they would be required to limit their expansion in China.
Meanwhile, Bloomberg reported on Tuesday that Taiwan’s Ministry of Economic Affairs is looking into four Taiwanese firms’ relations with Huawei Technologies, which has been sanctioned by the US since 2019.
The report said the four firms may have helped Huawei circumvent US chip-related bans. They include a unit of chip material reseller Topco Scientific Co, a unit of L&K Engineering Co, a unit of construction firm United Integrated Services Co and Cica-Hunter Chemical Technology Taiwan Co.
The report also claimed they provided services to the Shenzhen-based Pengxinwei IC Manufacturing Co, Pensun Technology Co and SwaySure Technology Co, which plan to make chips for Huawei.
The United Integrated Services confirmed that its unit won a contract from SwaySure Technology to renovate its factory and has already started construction work. It said as the work does not involve any chip equipment or products, it does not violate the US regulations.
Topco Scientific Co said its Suzhou subsidiary won a contract from Pengxinwei in early 2022 to handle its wastewater. Cica-Hunter had previously said on its website that it won contracts to build chemical supply systems for Pensun and Pengxinwei. L&K did not comment on Bloomberg’s report.
Pengxinwei was blacklisted by the BIS in October 2022 as it was building foundries and sourcing second-hand lithography equipment to make 28nm chips beginning in 2025.
Read: China, US de-escalate with talks, metals concession
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