The U.S. has expanded its restrictions on the sale of semiconductor manufacturing equipment to Chinese vendors to the 14 nanometer process level. Previously, equipment makers were banned from selling gear that can fabricate chips at the 10 nm or better manufacturing process.
Lam Research recently revealed it was told by the U.S. government to restrict sales of equipment likely to curb the development of advanced process technologies by China’s largest foundry, Semiconductor Manufacturing International Corp (SMIC). The news comes after reports in July indicated the government was looking to further restrict sales of chip equipment.
Restricting process technologies to 14 nm would cover a broader range of semiconductors that would be affected, curbing SMIC and other chipmaker’s ability to compete on the global stage against the U.S. and other regions.
According to a report from the Taipei Times, the U.S. Biden Administration sent letters to equipment makers detailing them not to supply equipment to Chinese firms. Lam and KLA Corp. confirmed that the company has been notified by the U.S. government on the new restrictions on semiconductor equipment to China.
Additionally, U.S. senators are trying to place similar restrictions on another semiconductor vendor in China, Yangtze Memory Technologies Company (YMTC). According to Reuters, the senators want the Department of Commerce to slap restrictions on the company because they are an immediate threat to national security and U.S.-based chip companies.
YMTC produces NAND flash memory chips that are used in a wide range of portable devices such as smartphones, tablets and watches as well as in servers, computers and laptops.
The blacklist
Following adding Chinese networking vendor Huawei to the Bureau of Industry and Security (BIS) Entity List in 2019, the U.S. government added SMIC to the Entity List in 2020 restricting sales of critical electronics for the manufacturing of semiconductors in the country.
The moves effectively blacklist U.S. vendors from doing business with Huawei or SMIC without having to get a special export license.
Since the U.S. started adding Chinese manufacturers to the Entity List, most Chinese foundries have started to develop domestic semiconductor equipment while expanding mature process technologies at 28 nm and above. According to market research firm TrendForce, if China can domestically ramp up its domestic equipment, it would become independent of U.S.-affiliated manufacturers.
Currently, domestic equipment in China is not at that level yet with U.S. manufacturers controlling key semiconductor processing machines that are crucial in the manufacturing of semiconductors at 7 nm and below.
SMIC was developing its 7 nm process technology called N+2 prior to the ban in 2020 using deep ultraviolet (DUV) exposure techniques. However, with semiconductors approaching physical limitations, if DUV is used instead of extreme ultraviolent (EUV) technology, it may require a much more complicated production process, which could affect yield and cost performance, TrendForce said.
The market research firm said it may be hard for SMIC to produce complex logic chips using this process and the mass production scale of N+2 will be very limited without U.S.-affiliated equipment.
Mature expansion
Because of the restrictions on fab equipment, Chinese foundries are expanding production capacity of mature processes with the proportion of 12 inch production capacity increasing from 24% to 27% in the next three years.
SMIC has successfully mass produced 7 nm semiconductors but with these new restrictions it is likely DUV immersion systems will grow in China, especially if China expands its 40 nm and 28 nm processes even further to accommodate more mature process technologies for mature electronic components.
