New US sanctions impose restrictions on the activities of contract chip manufacturers

The outgoing US administration continues to issue legislative restrictions designed to curb China’s technological development. The sanctions on the supply of computing accelerators have added restrictions on contract chip manufacturers, even outside the United States, which will now have to be more careful about whether their clients are acting in the interests of the Chinese defense industry.

Image source: Micron Technology

Formally, as Reuters explains, companies like TSMC and Samsung are deprived of the opportunity to freely supply to China semiconductor components produced using 14-nm or 16-nm technologies, which, with certain reservations, can be used for the development of artificial intelligence infrastructure in China. To service orders of this kind, a special license will be required, the issuance of which may be refused by American regulators if there are signs of deliveries of final products in the interests of the Chinese defense complex. Contract manufacturers can simplify cooperation with clients if their counterparties are trusted by the US authorities, and these requirements also apply to companies providing chip packaging and testing services. Relevant market participants will be required to undergo regular audits under the supervision of US specialists and report on the nature of their interactions with clients. The restrictions did not include chips that have a certain level of performance, which should not be enough for the development of AI systems.

Special restrictions have been introduced in the production of DRAM chips suitable for creating HBM memory stacks, which are needed for computational accelerators in the field of artificial intelligence. These measures will most likely affect the activities of the Chinese company CXMT, which has come closest to mastering the production of HBM among its compatriots.

In addition, US authorities added 25 Chinese companies suspected of having links to the defense sector to their sanctions lists. The developer of artificial intelligence systems Zhipu AI was among them, as was Sophgo, suspected of secretly ordering Huawei Ascend 910B accelerator chips. Two Singaporean companies were also included in the sanctions list.

The Chinese Ministry of Commerce condemned the new US sanctions, noting that they will only strengthen China’s desire to develop its own innovations and achieve self-sufficiency in the technological field. The previous set of sanctions regarding the distribution of American-origin computing accelerators was condemned both by the European Commission as a whole and by individual countries such as Poland and Israel, which were included in the group of countries with limited access to specialized accelerators.