The U.S. Congressional Research Service (CRS) has pointed out that the U.S. sanctions on 28-nm semiconductors have a strategic hole. There are also reports that large U.S. semiconductor manufacturers are lukewarm about cooperating with U.S. authorities, giving the United States unexpected difficulties in holding the Chinese semiconductor industry in check.
According to the CRS website on Oct. 9 (local time), researchers at the CRS said in a report titled “Semiconductors and the U.S. CHIPS Act in a Global Context” that the Chinese government is using policies to promote investment in 28-nm semiconductors.
The CHIPS Act, enacted last year, sets a hurdle to prevent subsidized companies from producing sub-28-nm semiconductors in China for the next 10 years. But a CHIPS Act guardrail rule released in September by the U.S. Department of Commerce excludes fully depleted silicon on insulators (FD-SOIs), which involves packaging operations for semiconductors of 28 or more nanometers from the list of semiconductors that are critical to America’s national security and are therefore subject to regulations and checks.
With the Chinese government focusing on 28-nm semiconductor technology, the CRS researchers believe that the difference in approaches between the United States and China left China a strategic hole for the transfer of U.S. technology to China.
28-nm semiconductors are widely used not only in commercial but also military applications, including fifth-generation (5G) telecommunication technology, electric vehicle power trains, cell phones, and the internet of things (IoT). They are characterized by their high cost effectiveness. While 28-nm chips are considered a general-purpose (legacy) semiconductor, the researchers point out that even next-generation semiconductors use about 80 percent of existing technologies, so it is important for U.S. authorities to keep in mind the possibility of China implementing advanced semiconductor functions with 28-nm chips.
“There is a risk that China will lead the world in 28-nm semiconductor production and use it to advance its semiconductor technology value chain,” the researchers said. They continued, “The Chinese government’s policies and support are highly likely to enable China to make significant progress in this area, we think.”
The researchers also cited China’s market size, its status as an electronics consumer goods production center, and its technological advances in semiconductors as China’s advantages. Chinese media outlets such as Guancha, citing the New York Times (NYT), reported that the Biden administration slowed down the pace of progress in semiconductor export restrictions on China in recent months, including because of resistance from large U.S. chipmakers such as Nvidia, Intel, and Qualcomm. They asserted that due to U.S. sanctions, China will pump up its efforts to build an independent semiconductor industry, which may lead to the unintended consequence of making a world dominated by Chinese-made semiconductors.
China accounts for about one third of the global semiconductor market, with Nvidia, Intel and Qualcomm collectively earning more than US$50 billion annually, according to Guancha.
Meanwhile, the U.S. government is reportedly in the final stage of mapping out a plan for additional sanctions on exports of advanced semiconductors for artificial intelligence (AI) and semiconductor manufacturing equipment for production of them to China. The plan will close loopholes in semiconductor export control measures announced by the U.S. government in October 2022 and adding regulations to them, a major foreign media outlet reported.