How many of the top chipmakers in China will be subject to new export controls in 2021?
Related questions. This question is part of a cluster that includes U.S. exports of semiconductor chips to China, U.S. exports of semiconductor manufacturing equipment to China, Chinese imports of semiconductor chips, Chinese imports of semiconductor manufacturing equipment, and the percentage of top SME producers' revenue that comes from China.
Context. The semiconductor manufacturing process has many components manufactured through complicated, highly globalized supply chains. China's ability to produce advanced semiconductor chips is particularly dependent on imports of advanced semiconductor manufacturing equipment (SME). Chinese chipmakers can then use imported or domestically produced SME to produce chips domestically.
For chip foundries, the top Chinese companies are Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor, Hua Li Microelectronics, and XMC. In September 2020, the Commerce Department notified the chip industry that SMIC was subject to military end-use end-user controls.
For memory chips, China had three national champion companies: ChangXin Memory Technologies (CXMT), Yangtze Memory Technology Co. (YMTC), and Fujian Jinhua Semiconductor. In October 2018, the Trump Administration placed Fujian Jinhua on the Entity List, effectively ending its ability to operate.
The United States can impose export controls on technologies or companies. For the latter, the two primary mechanisms are (i) the Commerce Department's Entity List, and (ii) "military end-use or end-user controls," which apply to exports to any Chinese end-user if the goods will be used for military purposes. Although the latter applies automatically to exports that satisfy the regulatory standard, the Commerce Department often notifies the chip industry when it determines that military end-use or end-user controls apply to a company, as it recently did for SMIC.
For additional background, see Khan, U.S. Semiconductor Exports to China: Current Policies and Trends (2020).
Data and resolution details. For this question, top chipmakers include:
- ChangXin Memory Technologies (CXMT)
- Yangtze Memory Technology Co. (YMTC)
- Hua Hong Semiconductor
- Hua Li Microelectronics
SMIC and Fujian Jinhua are excluded because they were recently subjected to new export controls.
New export controls will be considered imposed on a company if either (i) the Federal Register includes the addition to the Entity List, or (ii) popular media reports that the Commerce Department has notified the chip industry that the company is subject to military end-use or end-user controls.
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