https://asiatimes.com/2020/12/the-tech-war-that-isnt/
Washington last week added China’s Semiconductor Manufacturing International Corp (SMIC) to the “entity” list that requires US companies to get special permits to trade with it, rattling the Chinese chipmaker’s stock price. But China hawks in the US Senate complain that the wording of the new rules makes them easy to circumvent, and allege that the Commerce Department bowed to the “parochial commercial interest” of US companies trading with China.
The trouble is that China’s market for semiconductor technology is growing so fast that American firms fear for their long-term viability if they are not involved. The Trump Administration imposed controls on the export of key semiconductor technology six months ago, but American chip design companies’ China sales are booming. Cadence Design Systems, one of America’s top two makers of design software, reports a near-doubling of China sales during the third quarter – after the controls went into effect. Meanwhile, America’s top design firms are investing in the Chinese startups that are hiring away some of their best talent, in order to keep a foot in the door of the Chinese market if they are prevented from selling directly.
Senators Marco Rubio (R-FL) and Rep. Michael McCaul (R-TX) complained Dec. 22 that the new controls announced on SMIC, China’s largest chip fabricator, have a big loophole: The new rules apply only to equipment that is “uniquely” required to produce the most advanced logic chips, with a transistor gate width of 10 nanometers or below. But there’s no clear definition of what “unique” means, so “the Department of Commerce seems to be allowing SMIC access to nearly all semiconductor manufacturing equipment – undercutting the effectiveness of its nominal intent.”
The two Republicans added, “In effect, SMIC will not face serious restrictions, because very few tools are “uniquely capable” of producing a certain chip size. Indeed, SMIC publicly stated that its designation has no material adverse effect on the company’s short-term operations.”
They’re right, but they miss the big picture. SMIC is a minor factor in the world semiconductor market and in China itself, while a myriad of other firms – including telecom giant Huawei – are building chip fabrication lines without restricted US equipment.