Export rules hurt U.S. firms
By Michael Santarini, Senior Editor, EDN -- EDN, July 1, 2006
The notion of weapons of mass destruction (WMD) has turned into a quagmire for U.S. firms wanting to produce leading-edge ICs at fabs in mainland China.
In an "export 101" panel session at Semicon China in Shanghai last March, U.S. and Chinese officials outlined how WMDs has become the top concern for semiconductor export controls to mainland China. But critics contended that U.S. agencies do not have a realistic grasp of semiconductor technology's application to WMDs. Critics argue that the agencies are placing overly burdensome restrictions on certain types of technology while not restricting technology that should be restricted.
For example, the Commerce Department and DoD have imposed tight restrictions on U.S. firms manufacturing sub-180-nanometer devices in Chinese fabs, according to Dr. Zhibo Zhang, a U.S. semiconductor industry veteran.
"The arbitrary restriction on sub-180-nanometer exports from the U.S. to China has adversely affected business interactions between U.S.-based integrated device manufacturers [IDMs] and Chinese foundries such as SMIC and GSMC," says Zhang. "U.S. semiconductor companies cannot easily use SMIC as a foundry partner to manufacture advanced chips based on 90-nanometer or 65-nanometer technologies. This certainly limits a U.S. IDM's options and reduces its pricing negotiation power with Taiwanese foundries TSMC and UMC," he says. This also helps non-U.S. IDMs nab business from American firms.
Forty countries producing fab equipment and semiconductors around the world have signed on to the security policies of the Wassenaar arrangement, which sets security guidelines for selling and monitoring commercial technology that can also be used to create weaponry.
"It is up to each Wassenaar member to implement the rules through its own national system but also use its own discretion when granting licenses," says Maggie Hershey, director of public policy at the industry organization SEMI. "Not surprisingly, there are some differences from nation-to-nation and a difference in opinion when it comes to China. In the U.S., almost all the applications are approved, but it takes a long time."
Fab equipment requires an export license that can take six months to clear, but Karen Murphy, senior director of trade at Applied Materials, says most requests eventually go through without a hitch.
Still, some restrictions fail to distinguish which silicon technologies might be used to create WMDs and which ones would not. Bleeding-edge commercial process technologies such as 90 nm and 65 nm can be used to create weaponry but are less stable, harder to design, built for mass production and extremely expensive compared to older technologies. Older process geometries are inherently less susceptible to failures such as premature triggering due to an atmospheric neutron strike, a bit error or even static electricity than newer process technologies.
Nonetheless, a large percentage of the equipment sold to China by U.S. firms is refurbished for production of older semiconductor devices. Hershey says those technologies still have export restrictions but that those restrictions are typically not as rigorous. "The equipment market in China is roughly $1.2 billion, but an additional $400 million to $600 million in used equipment is sold to China every year," she says. Chinese firms using older equipment are monitored closely by the U.S. government and must be able to account for the integrity of their customers.
Most companies implementing ICs in 90 nm and 65 nm manufacture in massive quantities. It's plausible that a rogue nation would not need to mass produce components for a nuclear device.
"The knowledge that's critical for producing advanced weaponry involves mostly hardware and software system know-how," says Zhang. "For instance, it's doubtful that one could find a single chip manufactured with sub-250-nm technologies in a Russian or Chinese nuclear warhead, because those WMDs do not require chips that can operate at fast speed and low power. Advanced supercomputers or systems that can be used to design or control WMDs can be constructed completely from commodity chips, given the necessary system know-how."
