Source: Visual China

Interface News reporter Li Biao

Interface News Editor: Wen Shuqi

At the last moment of the U.S. presidential change, the Biden administration once again introduced policies to restrict China's semiconductor industry.

This time, the Entity List export control measures commonly used during Joe Biden's presidency have been retained, but the scale has been further expanded. According to the announcement issued by the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce on December 2, the United States will add 140 new companies to the "Entity List", including 136 Chinese companies, 1 Japanese company, 1 Singapore company and 2 South Korean companies.

Almost all of the new companies on the entity list are from the semiconductor industry, and they are mainly concentrated in materials and equipment companies in the upstream of the industrial chain. A number of domestic industry leaders and their subsidiaries have been included in it, including semiconductor etching machine manufacturer NAURA (002371.SZ), semiconductor thin film deposition equipment manufacturer Tuojing Technology (688072. SH), a number of companies under the semiconductor design software (EDA) leader Beijing Huada Jiutian Technology Co., Ltd. (301269.SZ), semiconductor quantity testing equipment manufacturer Zhongke Flying Testing (688361. SH）。

Furthermore. The four new overseas companies are also related to China's semiconductor industry. The new Japanese company, Kingsemi Japan, is a wholly-owned Japanese subsidiary of Shenyang Xinyuan Microelectronic Equipment Co., Ltd. (KINGSEMI), Singaporean company Skyverse Pte is an affiliate of Skyverse Technology Co., Ltd. (688361.SH), and Korean companies ACM Research Korea and Empyrean Korea They are Shengmei Semiconductor (NASDAQ: ACMR; 688082.SH), an affiliate of Empyrean.

After being included in the Entity List, some of the above-mentioned companies issued a statement in response. NAURA announced on December 2 that the company and its ten subsidiaries have been included in the entity list of the U.S. Department of Commerce, and the current production and operation are normal, and being included in the "entity list" will not have a substantial impact on the company's business. EDA company Huada Jiutian (301269.SZ) announced that the core technology involved in the company's EDA tool software comes from the company's own patents and self-developed technologies, which can ensure the independence and integrity of the company's business operations and the safety and reliability of its technical services. The impact of being added to the Entity List by the United States is generally controllable.

According to the effect of the Entity List, it will be difficult for a company on the Entity List to obtain permission for the export, re-export and domestic transfer of items subject to the U.S. Export Administration Regulations (EAR), and even if it is produced outside the United States, if the production process uses U.S. technology, it may also be subject to the jurisdiction, which means the risk of supply disruption for the company's daily operations.

In this regard, a number of companies revealed that they have been laying out the supply chain system for "de-risking" for many years, which can ensure the stability of their business operations. The person in charge of investor relations of Tuojing Technology told the interface news reporter that the relevant personnel of Zhongke Feice and North Huachuang also said that in recent years, they have laid out in advance to deal with external measures, and the current sales market and the company's revenue are mainly concentrated in China, and the company is also striving to achieve self-production and controllable key parts.

According to Caixin, Wingtech Technology (600745.SH), a new power device and optical module manufacturer added to the list, revealed that after a preliminary assessment by the company's legal counsel and third-party lawyers, according to the relevant regulatory provisions, the restricted items on the general entity list are relatively limited, and the sale of products and services to customers will not be directly restricted due to the list. In the future, the company will continue to pay attention to and evaluate the relevant impact, and maintain active communication with suppliers and customers.

A professional legal person in the industry told reporters that more than seventy percent of the entity list are semiconductor equipment manufacturing companies, as well as a number of EDA software tool companies and material companies. The equipment and materials related to semiconductor manufacturing are the core targets of the United States' tightening control of semiconductors in China, and if you count SMIC, which has been added to the entity list, almost all leading companies are included in the control. This kind of "all-in-one crackdown" against upstream suppliers will have a wider chain reaction across the entire industrial chain.

It is worth noting that in addition to semiconductor equipment and materials, the latest US entity list also adds export controls on AI advanced storage HBM for the first time.

HBM is currently a key memory component on AI chips from companies such as Nvidia, AMD, and Intel. According to the new standard, memory bandwidth density (the basic unit of HBM performance) greater than 2GB/s per square millimeter will be regulated. According to this standard, almost all mainstream HBM products on the market today exceed this performance red line. Taking the industry's most advanced HBM3E product this year as an example, the conversion of this indicator is close to 10GB/s, and the HBM2E released by various manufacturers in 2020 is also close to 5GB/s.

At present, the main HBM production capacity is concentrated in South Korea, and SK hynix, Samsung, and American manufacturer Micron control most of the world's HBM orders. In addition to the Entity List, which directly controls HBM products made in the United States, although South Korea has not yet issued a corresponding control policy, the market judges that the United States will use the Foreign Direct Product Rule (FDPR) to include HBM products from third countries that use U.S. technology, software, or equipment.

The new rules do not explicitly disclose whether the restrictions will spread to Japan, South Korea, the Netherlands and more third-party countries and regions. However, Reuters reported on December 1 that the United States will use the FDPR restrictions to expand the scope of equipment produced in Malaysia, Singapore, Israel, Taiwan and South Korea, with the Netherlands and Japan not among them. Dutch lithography giant ASML recently said it was evaluating the impact of the new U.S. export regulations.

In the face of a new round of U.S. sanctions against China's semiconductor industry, the Chinese government has also taken a series of response actions to express its protest.

On December 2, a spokesperson for China's Ministry of Commerce issued semiconductor export control measures in response to the United States, saying that the measures further tightened export controls to China on semiconductor manufacturing equipment, memory chips and other items, and added 136 Chinese entities to the list of export control entities. China firmly opposes the US's continuous broadening of the concept of national security, abuse of export control measures and unilateral bullying.

In addition, China has also introduced controls on semiconductor-related raw materials to the United States. On December 3, China decided to strengthen export controls on dual-use items to the United States, including prohibiting the export of dual-use items to U.S. military users or military applications, strictly controlling the export of gallium, germanium, antimony, superhard materials, and graphite-related dual-use items to the United States, and prohibiting re-export from other countries and regions. In response to this at a press conference on the 3rd, the spokesperson of the Ministry of Commerce said that in recent years, the United States has frequently politicized and weaponized economic, trade, and technological issues, and unreasonably restricted the export of relevant products to China, and China's move is to "safeguard national security and interests, and fulfill international obligations such as non-proliferation".

The U.S. restrictive policy on China's semiconductor upgrade has also attracted attention from all walks of life in China. On the 3rd, the China Semiconductor Industry Association, the China Association of Automobile Manufacturers, the Internet Society of China and the China Association of Communications Enterprises issued a statement together, saying that due to the frequent adjustment of control rules by the United States, American chip products are no longer safe and reliable, and called on Chinese companies to purchase American chips carefully.