The Chinese government has vowed to “implement necessary measures” after media reports said the United States would add more Chinese semiconductor firms to its Entity List.
He Yadong, spokesperson of the Chinese Ministry of Commerce, on Thursday threatened to retaliate against Washington after Reuters reported on November 22 that the Biden administration would soon unveil a new round of sanctions to ban shipments of US chips and chip-making equipment to 200 Chinese chip companies.
Media reports said the curbs would be announced before November 28, or Thanksgiving Day, but they have not yet been announced as of this writing.
Some Chinese commentators said China should further tighten its export rules to prevent US companies from obtaining its metals such as germanium and dysprosium.
“China has dominated the supply of precious metals such as germanium and dysprosium, which are the most important raw materials in the semiconductor industry,” a Jilin-based columnist says in an article. “Our country can completely stop the export of these raw materials, forcing western countries to delay the pace of their technological development.”
He said this move would provide more time for China to catch up with the US in terms of technological development.
He said China should consider forming an alliance with Singapore and Japan to jointly stop the US from obtaining key raw materials to make chips.
Meanwhile, some other Chinese commentators are not optimistic that China can unveil any effective countermeasures against the US.
A Henan-based writer using the pseudonym “Xiaoxi Lishi” published an article with the title “200 Chinese chip firms will be sanctioned. This is game over!”
“The potential sanctioning of 200 Chinese chip companies is undoubtedly a heavy blow to the fast-growing chip industry in China,” the article says. “If chip foundries or packaging firms cannot get their core machine parts, they will have to stop production and suffer from heavy losses.”
The writer says such a disruption will also extend to the upstream and downstream sectors, slowing China’s industry upgrade. He adds that the only thing that China can do is to boost its investment in research and development and form new partnerships with other countries.
200 Chinese firms
In late July, Reuters reported that the Biden administration planned by the end of August to expand the coverage of its Foreign Direct Product Rule (FDPR), which was first introduced in 1959 to control the trading of US technologies.
The wire service also said that the US plans to add about 120 Chinese entities, including six chip foundries and their hardware and software suppliers, to its restricted trade list.
But the White House postponed the announcement as American chip and chip-making equipment makers are worried that their revenue in China will be sacrificed.
Citing an email sent by the US Chamber of Commerce to its members on November 21, Reuters reported that the US Commerce Department planned to publish the new regulation “prior to the Thanksgiving break.”
The email also said that another set of rules curbing shipments of high-bandwidth memory chips to China was expected to be unveiled in December.
Analysts said that these would be the Biden administration’s last two rounds of curbs against China’s chip sector before Republican President-elect Donald Trump takes office on January 20, 2025.
N+3 process
The Reuters report about the potential sanctions against 200 Chinese firms came a few days after Richard Yu, chief executive of Huawei Consumer Business Group, said on November 15 that Huawei would launch its Mate70 flagship smartphone on November 26.
Chinese media said the premium Mate70 models would use a new 7-nanometer processor known as the Kirin 9100, which is said to be comparable to Qualcomm’s Snapdragon 8 Gen 2 and 8+ Gen 1 for central processing units (CPU) and graphic processing units (GPU), respectively.
They expected Chinese chipmaker Shanghai Manufacturing International Corp (SMIC) to use its deep ultraviolet (DUV) lithography machines and N+3 process to produce the 9100 processor.
But on November 26, Huawei’s fans were disappointed by news that the Mate70 Pro would use a chip called Kirin 9020, which is only a fine-tuned version of the existing Kirin 9010 processor made with N+2 process.
The N+3 process can feature 130 million transistors per square millimeter while the N+2 one can only achieve 89 million transistors per square millimeter.
Some Chinese commentators said the failed debut of the 9100 chip showed that Huawei and SMIC were unable to improve their foundry technology without ASML’s extreme-ultraviolet (EUV) lithography machine.
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