Chinese companies reportedly buying used equipment to get around U.S. sanctions

With the U.S. preparing to put even stricter restrictions on sales to China, it seems Chinese chipmakers are doing everything they can to get gear into their country. According to anonymous industrial sources, Chinese companies are doing whatever they can to get around U.S. sanctions, including buying up used equipment and importing it under the radar into China.

At the moment, the U.S. has sanctions on selling anything that can be used to manufacture chips at a 14nm size or below, and those restrictions are expected to step up, with the U.S. working with Japan and the Netherlands to put even stronger regulations in place. Huawei in particular has even more severe sanctions placed against it, as it can’t use any U.S. components in its devices without explicit permission from the U.S. government. Huawei has also increased its orders in line with other companies, possible because of its plans to build a fab with SMIC (Semiconductor Manufacturing International Corporation).

At the moment, only SMIC has the ability to create chips at 14nm or below, but with regulations due to step up, other chipmakers are getting nervous, and have stepped up their buying and importing practices to stockpile technology before the sanctions hit. Specifically, companies across China are buying large amounts of wafer fab equipment (WFE), and have resorted to buying even used equipment in their quests to ensure they won’t be hurt too badly by any new rules. According to those same sources, some of the WFE bought in this way has to be brought in secretly, as it already violates the sanctions placed by the U.S. government.

Of course, part of the reason for the current panic is that no-one knows exactly what the U.S. government is likely to be targeting in the next round of sanctions. As such, companies are buying up anything and everything, with the hope that at least some of it will be useful and will help following the new regulations. Thankfully, even companies like SMIC need technology of varying levels of maturity, as it builds semiconductors for a large range of devices, and needs the variability.

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