In a bid to curb China’s semiconductor development, the Biden administration on December 15 continued to add 21 primary Chinese firms working in AI chip industry to its export blacklist, including chip toolmaker Shanghai Micro Electronics Equipment.

According to Da Ji Yuan , China currently cannot produce advanced chips on its own, such as those used in the most recent smartphones. The primary reason was insufficient access to the state-of-art lithography machines. 

Shanghai Microelectronics is the only lithography manufacturer in China and the CCP’s best current hope to produce equipment for making high-end chips. 

Therefore, the U.S.’s latest move hits right at the heart of Beijing’s chip self-sufficiency ambition.

South China Morning Post noted that the 21 newly added Chinese AI chipmakers have alleged military ties with the CCP, while Shanghai Microelectronics was already on the U.S.’s Unverified List in early February.

Shanghai Electronics’s lithography production is still in its infancy as it can only make 90-nanometer chips which is way behind the cutting-edge.

The company has already delivered its first 2.5 to 3-dimension advanced packaging lithography machine on February 7.

But analysts pointed out that the machine is only used for wafer packaging, a part of the back-end process in chip production. Meanwhile, wafer making is a front-end process and needs more complicated equipment.

Song Changgeng, a research director at consultancy ICWise, said, “What we are currently stuck on is a lithography machine for wafer manufacturing with a resolution below 40-nm. No visible results have been achieved in this field.”

Lucy Chen, vice president of Taiwan-based Isaiah Research, commented, “If China wants to reach a certain level of self-reliance in the semiconductor industry… Chinese tool vendors need to work on the lithography tools for foundries and the technology needs to be good enough to compete with ASML, Canon, and Nikon.”

As reported by SCMP, China has to depend on wafer fabs of Taiwan’s TSMC and Samsung Electronics due to being unable to manufacture cutting-edge chips. However, both TSMC and Samsung Electronics also adhere to the U.S.’s new exports restraints.

Among the newly added firms, the two most notable ones were China’s dominant flash memory maker YMTC and a state-backed company which makes up 5-6% of the world’s NAND flash memory market.

In October, the Commerce Department already added both firms to its Unverified List, citing transferring U.S. technologies to the controversial telecom behemoth Huawei, and video surveillance maker Hikvision.

In addition, last November, the U.S. policymaker also blacklisted Tiandy, one of the world’s leading surveillance camera manufacturers, for alleged abusing “hi-tech surveillance” against Uygurs and other Muslim minority groups in Xinjiang, as well as supplying U.S.-made items to Iran.

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