New US export controls force toolmakers to suspend sales and services to Chinese semiconductor companies. Leading chip equipment suppliers have suspended sales and services to semiconductor manufacturers in China, as new US export controls disrupt the Chinese tech industry and global companies’ operations, Financial Times writes.
Lam Research, Applied Materials and KLA Corporation, US companies which hold dominant shares in certain segments of the semiconductor manufacturing process, have all taken immediate measures to comply with the new rules, according to several people with direct knowledge of the matter. ASML, the Netherlands-based global leader in chipmaking equipment, has told its US staff to stop serving all Chinese customers while it assesses the sanctions.
The new restrictions, announced on Friday last week, ban the export to China of US semiconductor equipment that cannot be provided by any foreign competitor.
They also impose a licence requirement for exports of US tools or components to China-based fabrication plants, or fabs, that make advanced chips, and for exports of items used to develop Chinese homegrown chip production equipment.
They also require any US citizen or entity to seek permission from the Department of Commerce for providing support to Chinese fabs.
On Tuesday, LAM Research started pulling out support staff from China-based chipmakers, including memory chip producer Yangtze Memory Technologies Corp. It asked employees to “stay away from fabs in China for now”, said a LAM employee who asked for anonymity because of the matter’s sensitivity.
LAM also suspended presale negotiations with Chinese customers and withdrew staff participating in building new fabs in China, according to two employees with direct knowledge.
Applied Materials and KLA also stopped offering services for China-based manufacturing lines producing advanced chips from Wednesday, said three sources familiar with the situation. “We were told that the company needed time to evaluate what they can sell in China,” said one Applied Materials sales manager. “It is unsustainable if we could only provide services but not sell equipment.”
Three YMTC employees said US toolmakers suspended supplies and services to both its existing fabs and those under construction.
ASML, the world’s leading provider of lithography equipment for cutting-edge chip production, said in a message to staff that all US employees — including US citizens, green card holders and foreign nationals who live in the US — are now prohibited from providing services to fabs in China. “ASML US employees must refrain — either directly or indirectly — from servicing, shipping or providing support to any customers in China until further notice,” the letter said. “We are of course taking precautionary measures in order to ensure full compliance with the new regulations,” added an ASML spokesperson.
The China Semiconductor Industry Association said in a statement on Thursday that it hoped “the US government can adjust its wrong course of action”. The short-term impact of the new restrictions on foreign chipmakers with fabs in China is expected to be limited as they can apply for US government permission to continue receiving US equipment.
Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, said it had received a one-year authorisation for its Nanjing fab.
South Korean memory chipmaker SK Hynix said it would not be subject to the suspension of US toolmaker supplies as it had been given a one-year grace period as well. Its larger rival Samsung declined to comment.
The new controls are hitting the industry in a downturn. TSMC, which had previously been unaffected by a sharp contraction in smartphone and PC demand, cut its capital investment target for this year by 10 per cent, saying it now expected to spend $36bn instead of the previously budgeted $40bn this year. The Taiwanese company said a sharp inventory correction because of slumping smartphone and PC demand was likely to drive the chip industry into decline next year, although TSMC still expected to grow in 2023. CC Wei, TSMC’s chief executive, said the company’s initial assessment was that the impact of the new export controls on the company would be “limited and manageable” because they were focused on very high-end chips.
