The current administration of US President Joseph Biden has about two months left to work, because in the second half of January Donald Trump will occupy the White House. Therefore, officials work hard to bring what was previously planned to fruition. This may play into the hands of the Chinese semiconductor industry – the new package of sanctions against it, which will be presented next week, may not be as severe as discussed.
Image source: Micron Technology
As Bloomberg reports, citing knowledgeable sources, a new package of sanctions will be presented by the current US government this coming Monday, and its formation was preceded by constant changes. In the final version, it will take into account the wishes of representatives of the American industry, as well as geopolitical partners represented by Japan and the Netherlands, which also supply equipment and materials for the production of semiconductor products to China.
First of all, the list of Chinese companies that will be subject to new US sanctions will not be as extensive as previously planned. For example, at least six suppliers of Huawei Technologies were initially under threat of new sanctions, and American officials still had the same number of suppliers in mind. Now the list of Huawei’s partners subject to restrictions will be reduced to only a few companies, and CXMT, which is trying to independently produce HBM2 memory in China, will not be included in it. But South Korean Samsung and SK hynix, as well as the American Micron Technology, under the new restrictions, will not be able to supply the full range of their HBM family memory to China.
Two SMIC enterprises, which supply Huawei with advanced chips manufactured on its order, will be subject to sanctions. SMIC itself has long been under various US sanctions, but now US authorities will focus on more targeted restrictions. Otherwise, the main figures on the new sanctions list will be more than 100 Chinese companies that produce equipment for the production of chips. The US authorities are no longer in a hurry to impose additional restrictions on Chinese companies that directly produce chips. Surely this position is caused by the protest of American equipment suppliers, who under the new conditions will retain the opportunity to work with Chinese clients. At the same time, new American restrictions will hinder the process of Chinese import substitution in the field of chip production equipment.
Given the current political climate, the Netherlands and Japan are in no hurry to introduce new sanctions against China, since the return of Donald Trump could change the rules of the game as early as January next year. The new US export control rules do not impose additional obligations on Japanese and Dutch suppliers, so it is now up to them to express solidarity with the US authorities. Typically, after the appearance of such news, the shares of many Japanese suppliers of equipment for chip production rose in price, because their revenue is now approximately half generated by Chinese clients.