Chinese companies are rushing to acquire advanced chips and electronic materials from U.S. suppliers before the new year due to concerns that Washington may impose more export restrictions on the chip industry, according to sources familiar with the matter as reported by Nikkei.
Since November, orders from suppliers such as DuPont, Entegris, and Chemours have surged, including various essential consumables like chemical mechanical polishing pads, filters, special containers, high-end lubricants, and advanced bulbs used for inspection and testing.
Suppliers say that besides the restrictions already announced by the United States, the Chinese tech industry is also worried about additional limits on the use of advanced chip manufacturing materials and designs.
A chip distributor familiar with inventory management stated, “In recent years, China has been increasing efforts to find local solutions, but the quality of chip manufacturing materials and consumables from some U.S. suppliers is still better and more stable than local products.”
DuPont provides high-quality pads crucial for the chemical mechanical polishing process, a key step in chip manufacturing. Entegris is a global leader in filters and FOUP suppliers, with FOUP being a specialized plastic carrier used for transporting wafers, while Chemours offers critical lubricants for various industries including aerospace.
Apart from procuring raw materials from U.S. suppliers, Chinese chip manufacturers and equipment suppliers are also urgently seeking alternative sources for high-end consumables controlled mainly by suppliers from the U.S., Europe, and Japan. These efforts include trying as much as possible to replace foreign chemical and material suppliers with domestic ones.
An executive from a chip production equipment supplier mentioned, “Clients have expressed concerns about possible disruptions in the supply of key consumables, prompting us to start looking for and verifying secondary sources as soon as possible.”
As the tech war between Washington and Beijing escalates, China is striving to reduce its reliance on U.S. suppliers. With Huawei facing U.S. sanctions for the past five years, Chinese tech companies have been forced to enhance their independent development capabilities.
The Biden administration recently announced new export restrictions and added 140 Chinese entities to the trade blacklist, including the largest chip equipment manufacturer in China. According to the specific restriction measures, suppliers must finalize business arrangements with blacklisted customers by January 2 or January 31, after which they need permits to continue business with blacklisted clients.
Earlier, Reuters reported on December 21 that the Biden administration is considering adding Chinese chip design company Sophgo to the U.S. Department of Commerce Entity List for illegally using chips produced by TSMC in Huawei’s AI processors. Sources revealed that chips ordered by Sophgo from TSMC matched those found in Huawei’s Ascend 910B processor.
Since 2020, shipping foreign-made chips to Huawei without U.S. licenses to prevent the theft and misuse of U.S. technology by the Chinese Communist Party has been deemed illegal.
On November 19, Bloomberg cited sources saying that to compete with Nvidia, Huawei is designing a new generation of two Ascend processors, but due to U.S. sanctions, Huawei’s chip manufacturing partners cannot access the equipment needed to produce the most advanced chips. As a result, Huawei’s new chips can only use the market-considered “outdated” 7nm architecture, leading its chip technology to lag behind three generations by 2025, according to overseas media analysis.
In terms of imports, the U.S. government announced a ban on government agencies purchasing products or services containing Chinese chips starting in December 2027. The U.S. released a supply chain review report this month concerning the production of mature process Chinese chips, indicating how many U.S. companies can confirm that their products do not contain Chinese chips.
The Biden administration initiated a 301 investigation into trade practices involving mature or less advanced Chinese semiconductors this week, but no conclusion will be reached before Biden leaves office next month. There are concerns that with Trump possibly returning to the White House, trade restrictions could become stricter.
(References from Nikkei News)