China is planning to speed up its efforts to build a legion of talent and win the battle to develop homegrown technologies, Chinese President Xi Jinping (習近平) pledged at the Chinese Communist Party’s twice-a-decade National Congress on Sunday, but new US restrictions issued a week earlier are already undercutting those plans.
The latest salvo of sanctions by US President Joe Biden’s administration includes restrictions on so-called US persons supporting the development, production or use of integrated circuits at some chip plants in China.
Effective from Wednesday last week, the measures are broad enough to encompass holders of US green cards, as well as US residents and citizens, capturing a wide swath of senior executives at Chinese semiconductor firms.
Foreign-born designers and engineers, along with Chinese with foreign passports or residency, have long played an instrumental role in the nation’s technological development.
In consumer electronics, Huawei Technologies Co (華為) accelerated its efforts to catch up to the iPhone by hiring former Apple Inc creative director Abigail Brody as its chief designer in 2015. The company also recruited internationally to build up its in-house chip and audio engineering and 5G wireless technology.
Six of the seven key research and development executives of China’s leading semiconductor equipment maker Piotech Inc (拓荊科技) are US citizens, it said in its Star Markets filing early this year.
Many in Piotech’s top management, including its chairman and general manager, are also Americans.
Previously, US measures to rein in China’s ascent have focused on a particular technology — such as banning Huawei from accessing advanced chipmaking by the likes of Taiwan Semiconductor Manufacturing Co (台積電) — but the new personnel restriction aims to deprive China of a deep pool of experience obtained in the US.
“The control on ‘US person’ is the biggest surprise to us from the announcement,” Bernstein analysts, including Stacy Rasgon, wrote. “Some Chinese companies have been progressing better, often thanks to founding members or executives bringing their experience from years of working in the US. Many of them hence are US citizens or green card holders.”
Anyone falling under the classification now requires a license to continue working in China or in support of chipmakers there, with a heavy burden of proof to show that their work will not go toward military end uses.
Given the variety of applications for any given semiconductor, it is challenging for Americans to prove that they would not be aiding China’s military, Bernstein said.
Firms such as Dutch chip equipment maker ASML Holding NV have now prohibited US staff from supporting Chinese customers, dashing hopes in Beijing that international chip industry players would remain neutral.
Meanwhile, Beijing-based semiconductor equipment maker Naura Technology Group Co (北方華創科技集團) has told its US employees in China to withdraw from component and machinery development to comply with Washington’s restrictions, the South China Morning Post reported.
Citigroup Inc analysts said in a note about the new set of US rules that Naura and fellow domestic chipmaking gear provider Advanced Micro-Fabrication Equipment Inc (中微半導體設備) “both believe that even though it applies to their staffs with US citizenship or Green Cards, those staffs should still be allowed to participate in the development or production of mature-node ICs.”
Still, the US curbs are a roadblock for China’s bid to achieve technological self-sufficiency. The measures not only cut the country’s access to advanced chips used in supercomputers and artificial intelligence research, such as those provided by Nvidia Corp, but also impede the arrival of researchers and engineers capable of designing such systems within its borders.
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