Global Sources
EE Times-Asia
Stay in touch with EE Times Asia
?
EE Times-Asia > Manufacturing/Packaging
?
?
Manufacturing/Packaging??

U.S. seeks to change rules on China exports

Posted: 20 Jul 2006 ?? ?Print Version ?Bookmark and Share

Keywords:high-tech export? China? U.S. Department of Commerce? VEU? validated end-user?

The U.S. government is proposing revisions of the rules regarding high-tech exports to China, some of which are intended to make it easier to sell semiconductor equipment into its growing IC market.

The U.S. Department of Commerce proposal includes three areas of interest to chip manufacturers and equipment makers. The first and potentially most important is a new authorization for "validated end-users" (VEU) to whom specified items may be exported; the second is a new control for items known to have military uses; and the third is the expansion of the requirement for China to issue its own end-user certificates. The revisions relate to the control of commercial exports to keep them from military applications.

The VEU has the potential to help speed up the process for exporting U.S. chipmaking gear to Chinese fabrication facilities. Instead of following the current practice of applying for licenses on a case-by-case basis, U.S. companies may be able to freely sell to companies that have been pre-screened and approved by the U.S. government. These would likely include companies like chipmaker Semiconductor Manufacturing International Corp. (SMIC), which has a track record of compliance with U.S. export licenses. Conversely, any companies with military ties wouldn't qualify.

The key problem for U.S. vendors doing business with China is that Japanese and European companies are able to obtain their government's approval for export licenses to China much faster than U.S. companies. U.S. Commerce Department statistics show that average processing times decreased 25 percent between 2003 and 2004, from 74 days to 55, said Maggie Hershey, director of public policy at Semiconductor Equipment and Materials International (SEMI), an industry organization.

But that compares to weeks or in some cases just days for competitors, so SEMI's initial position on the VEU is positive. "SEMI supports this type of approach and believes it has potential to reduce repetitive licensing and help streamline the licensing process for approved end users," Hershey said.

U.S. exports of semiconductor equipment to China almost doubled from 2001 to 2005, hitting $1.3 billion in the peak year of 2004, according to the U.S. International Trade Commission. Overall, there are more than 30 fabs in China, including eight or nine 200mm fabs and only one operational 300mm wafer plant.

The Information Network, a market research firm, reported that at least 43 fabs were scheduled to be built in China between 2004 and 2008. The creation of more 200mm and 300mm wafer fabs was a theme of China's recently approved five-year plan, the central planning document that guides the Communist country.

Exporting advanced U.S. chipmaking equipment to China has long been controversial; it is drawing even greater attention now that China is one of the fastest-growing markets for chip equipment. Tools capable of processing chips for the 0.25m node had been the perceived limit under U.S. controls and the Wassenaar Arrangement, a Cold War-era pact among European, North American and some Asian countries that regulates the export of "dual use" technologies applicable to both military and civilian pursuits.

In China, the full impact of the Department of Commerce's new proposal is still unknown. SMIC, China's largest buyer of advanced semiconductor equipment, is still reviewing the proposal, a company spokesperson said. The U.S. Embassy in Beijing and the U.S. Commerce Department's Bureau of Industry and Security were not able to provide clarification of the rules by press time.

Mei Xinyu, a trade analyst at China's Ministry of Commerce, said it's still unclear whether this new set of rules will make it easier to import advanced U.S. semiconductor manufacturing equipment. "It seems that the U.S. will open a door to China, but how wide will it open?" he asked.

On the U.S. side, not many companies knew much about the proposal, which was published earlier this month in the Federal Register and is open for comment until November 3. But, generally, the red tape seems to be thinning. "There will be a liberalization of export control regulations over time," said Don Mitchell, chairman and CEO of equipment supplier FSI International Inc. "There has to be. It's making it harder for U.S. companies to compete."

Whatever the eventual effect of the U.S. proposal, Mei said China should increase its R&D spending on semiconductor equipment. "Americans think only America can make advanced equipment. However, Chinese can still develop and make high-tech equipment ourselves. Importation is only supplementary," he said.

China is putting down roots for a domestic semiconductor and materials industry that could eventually go global, but no one thinks this will take place shortly. Because modern semiconductor fabs are still relative newcomers to China, the progress of the country's nascent equipment industry has been slow.

But that is beginning to change as a handful of domestic startups quietly develop tools. Though most of the efforts thus far have been in chemical vapor deposition and etch, a couple of companies and government labs are exploring more advanced lithography.

- Mike Clendenin
EE Times

Cai Yan in Shanghai and Dylan McGrath in San Francisco contributed to this story.




Article Comments - U.S. seeks to change rules on China ...
Comments:??
*? You can enter [0] more charecters.
*Verify code:
?
?
Webinars

Seminars

Visit Asia Webinars to learn about the latest in technology and get practical design tips.

?
?
Back to Top