Last Friday (7th), the United States imposed the most stringent export restrictions on China’s chip industry to date, including restrictions on the employment of American employees. Affected by the ban, it is said that US chip equipment companies have successively withdrawn their employees and technical support for chip companies in China.
On Friday, the U.S. Department of Commerce announced the expansion of the “Foreign Direct Product Rule,” which would allow U.S. chip makers to export chips for supercomputers, an important technology used in advanced artificial intelligence computing and modern weapons. An export permit must first be applied to the authorities. At the same time, Washington also has the power to ban the import of chips that use American technology but are manufactured in foreign countries.
In this ban, the Commerce Department further restricts the ability of “Americans” to support the development or production of China’s most cutting-edge chips, including Americans with U.S. passports and green cards and U.S. companies, which greatly hinders Chinese chip companies from recruiting foreigners people and even get the support of their technology.
The Wall Street Journal reported that U.S. chip equipment makers KLA (US: KLAC) and Lam Research (US: LCRX) are withdrawing employees from Yangtze Memory and suspending business activities at the plant. YMTC is supported by the National Integrated Circuit Industry Investment Fund, and its main business is the manufacture of dynamic random access memory (DRAM) and flash memory (NAND Flash).
The newspaper also quoted people familiar with the matter as saying that these chipmakers have suspended support for YMTC in the installation of equipment in recent days and have temporarily stopped installing new tools. They also play an important role in operating factories and developing manufacturing capabilities, and bring expertise in high-tech wafer production tools, the people said. If the ban is prolonged, customers such as YMTC will not have access to the upgrades, maintenance knowledge and future technology opportunities needed to develop wafers.
The South China Morning Post also reported earlier that North Huachuang, a Chinese manufacturer of chip manufacturing equipment, has asked its employees with U.S. citizenship to immediately stop participating in the project’s research and development.
In addition, Dutch lithography machine manufacturer ASML (US: ASML) also told its employees in the United States on Wednesday not to serve Chinese customers.
However, the U.S. government has also granted a one-year waiver for chips such as South Korea’s Hynix and Samsung, and Taiwan’s TSMC (US:TSM), allowing them to temporarily export chips to Chinese companies.
This time, Washington’s ban has dealt a very big blow to China’s chip development. Jim Lewis, a technology and cybersecurity expert at the Center for Strategic and International Studies (CSIS), a Washington think tank, pointed out that it will set China back for many years. Karl Freund, a chip consultant at Cambrian AI, pointed out that China must develop its own manufacturing technology and its own processor technology under the new regulations, and it may take five to ten years to catch up with today’s level.
Affected by the reduction in global demand for chips and the chip war between China and the United States, chip stocks have recorded significant declines in the past. Lam Research has fallen by nearly 19%, Kelei has fallen by more than 18%, and Applied Materials (US: AMAT) has fallen by more than 10%. 12%, Advanced Micro Devices (US: AMD) fell 23%, Nvidia (US: NVDA) fell nearly 9%, and TSMC (US: TSM) fell more than 15%. If the ban continues, it may affect the profits of these companies.
Source: Comprehensive report
Text by FORTUNE INSIGHT
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