China Dodges US Sanctions Buying Used Chip-making Equipment

With the US intent to tighten restrictions on the Chinese semiconductor sector, local chip makers are accelerating the procurement of Wafer Fab Equipment (WFE) to keep their factories running smoothly. At the same time, Chinese companies prefer to make these transactions covertly, as some of them are carried out in violation of Washington sanctions.

SMIC, HuaHong, Nexchip, Silan Microelectronics and others are buying everything they can get, including used equipment. Moreover, part of the equipment is prohibited from being sent to China, and therefore the parties prefer to conclude such transactions without publicity.

Among the active buyers of equipment, Huawei was noticed, which is under tough sanctions in Washington, according to which it has no right to purchase equipment containing advanced American technologies without permission from US regulatory authorities. Huawei's purchases are related to its plans to build a plant with the support of SMIC, so the company wants to get as much equipment as possible to equip it.

The sanctions prohibit the supply to China of equipment for the production of chips using the 14-nm process technology and more advanced manufacturing technologies. DigiTimes noted that only SMIC can produce chips using these technologies, so for most Chinese chipmakers, Washington's current restrictions are critical only in the long term.

However, the US is negotiating with Japan and the Netherlands, which also have major lithographic equipment manufacturers, to agree on measures to impose even stricter restrictions on the export of semiconductor technology and equipment to China. That is why Chinese companies have accelerated the purchase of equipment and components.

Due to the fact that at the moment it is not known exactly which items of equipment will be subject to export restrictions, Chinese companies are buying almost everything that may be needed to expand capacity and / or maintain current production.

Among the beneficiaries of tougher sanctions against Chinese semiconductor companies will be Taiwanese equipment manufacturers, which are operating at full capacity and have orders to ship to China as early as 2025.