When the US imposed sanctions on Chinese semiconductor makers, China began the push for sovereign chipmaking tools. According to a study conducted by the Emerging Technology Observatory (ETO), Chinese institutions have dramatically outpaced their US counterparts in next-generation chipmaking research. Between 2018 and 2023, nearly 475,000 scholarly articles on chip design and fabrication were published worldwide. Chinese research groups contributed 34% of the output—compared to just 15% from the United States and 18% from Europe. The study further emphasizes the quality of China's contributions. Focusing on the top 10% of the most-cited articles, Chinese researchers were responsible for 50% of this high-impact work, while American and European research accounted for only 22% and 17%, respectively.

This trend shows China's lead isn't about numbers only, and suggests that its work is resonating strongly within the global academic community. Key research areas include neuromorphic, optoelectric computing, and, of course, lithography tools. China is operating mainly outside the scope of US export restrictions that have, since 2022, shrunk access to advanced chipmaking equipment—precisely, tools necessary for fabricating chips below the 14 nm process node. Although US sanctions were intended to limit China's access to cutting-edge manufacturing technology, the massive body of Chinese research suggests that these measures might eventually prove less effective, with Chinese institutions continuing to push forward with influential, high-citation studies. However, Chinese theoretical work is yet to be proven in the field, as only a single company currently manufactures 7 nm and 5 nm nodes—SMIC. Chinese semiconductor makers still need more advanced lithography solutions to reach high-volume manufacturing on more advanced nodes like 3 nm and 2 nm to create more powerful domestic chips for AI and HPC.

China's dominance in semiconductor equipment procurement is expected to face its first setback since 2021, with spending projected to decrease from $41 billion to $38 billion in 2025, according to semiconductor research firm TechInsights. This 6% decline marks a significant shift for the world's largest buyer of wafer fabrication equipment, whose purchases represented 40% of global sales in 2024. The downturn reflects mounting pressures from both market dynamics and geopolitical constraints. US export controls targeting advanced semiconductor capabilities have intensified while domestic chipmakers grapple with overcapacity in mature node segments. SMIC, China's leading foundry, has already signaled concerns about oversupply risks in this sector, where Chinese manufacturers have rapidly expanded their market share against Taiwanese competitors.

Despite these headwinds, Chinese equipment manufacturers have notably advanced domestic capability development. Naura Technology Group has emerged as the seventh-largest global equipment manufacturer, while AMEC continues to expand its international presence. However, critical gaps persist in China's semiconductor equipment ecosystem, particularly in lithography systems, where dependence on foreign suppliers like ASML remains high. TechInsights data reveals that Chinese companies supplied only 17% of testing tools and 10% of domestic assembly equipment in 2023. The spending reduction comes after a period of aggressive stockpiling prompted by US sanctions to limit Beijing's access to advanced chipmaking capabilities, especially those applicable to artificial intelligence and military applications. However, Chinese manufacturers have demonstrated resilience, with SMIC and Huawei successfully producing advanced chips through alternative, albeit more costly, manufacturing methods.

Huawei's Ascend 910C AI chip was positioned as one of the better Chinese-developed alternatives to NVIDIA's H100 accelerator—reports from last autumn suggested that samples were being sent to highly important customers. The likes of Alibaba, Baidu, and Tencent have long relied on Team Green enterprise hardware for all manner of AI crunching, but trade sanctions have severely limited the supply and potency of Western-developed AI chips. NVIDIA's region-specific B20 "Blackwell" accelerator is due for release this year, but industry watchdogs reckon that the Ascend 910C AI GPU is a strong rival. The latest online rumblings have pointed to another major Huawei customer—DeepSeek—having Ascend silicon in their back pockets.

DeepSeek's recent unveiling of its R1 open-source large language model has disrupted international AI markets. A lot of press attention has focused on DeepSeek's CEO stating that his team can access up to 50,000 NVIDIA H100 GPUs, but many have not looked into the company's (alleged) pool of natively-made chips. Yesterday, Alexander Doria—an LLM enthusiast—shared an interesting insight: "I feel this should be a much bigger story—DeepSeek has trained on NVIDIA H800, but is running inference on the new home Chinese chips made by Huawei, the 910C." Experts believe that there will be a plentiful supply of Ascend 910C GPUs—estimates from last September posit that 70,000 chips (worth around $2 billion) were in the mass production pipeline. Additionally, industry whispers suggest that Huawei is already working on a—presumably, even more powerful—successor.

The Biden administration is rolling out a third major export control package aimed at China's semiconductor industry, as per a report from Reuters. Estimated to affect 140 companies, including China's chip equipment maker Naura Technology Group, Piotek, and Huawei Technologies, the effort aims to limit China's access to advanced chip making technology. In particular, technology that could be used in military products and artificial intelligence. Important sanctions include export controls to specific chip equipment manufacturers, blocking the delivery of high-performance memory chips and the addition of several semiconductor investment companies to the list of export-restricted entities.

The package expands U.S. regulatory authority through foreign direct product rules. It regulates chip manufacturing equipment manufactured around the world with U.S. technology, Japan and the Netherlands are exempt. However, the rules could have an impact on manufacturers outside U.S. such as those based in Israel, Malaysia, Singapore, South Korea, Taiwan and non-U.S. firms (i.e. ASML) due to the complexity of the technological and supply chain. This continues the Biden administration's strategy to limit China's semiconductor capabilities and comes just weeks before the Trump administration made changes. When asked about US new restrictions Chinese Foreign Ministry spokesperson Lin Jian said at a regular press conference on Monday that such behavior undermines the international economic and trade system, and disrupts global supply chains. China will take measures to protect companies' rights and interests.

According to a recent report from Nikkei, China has claimed the number one spot as the single highest spender on chipmaking tools. As the data from SEMI highlights, China spent a whopping $25 billion on key semiconductor tools in the first half of 2024, more than the US, Taiwan, and South Korea combined. And the train of acceleration for the Chinese semiconductor industry doesn't seem to be slowing down, as the country is expected to spend more than $50 billion for the entire year 2024. However, this equipment is not precisely leading-edge, as Chinese companies are under Western sanctions and are unable to source advanced EUV lithography tools for making sub-7 nm chips.

Most of the spending is allocated to mature node chipmaking facilities. These so-called "second tier" companies are driving the massive expenditures, and they are plentiful. Nikkei reports that there are at least ten firms that operate with mature nodes like 10/12/16 nm nodes. Being the biggest spender, China is also one of the primary revenue sources for many companies. For the US chipmaking tool companies like Applied Materials, Lam Research, and KLA, Chinese purchases accounted for 32%, 39%, and 44% of their latest quarterly revenue, respectively. Tokyo Electron recorded orders to China accounting for 49.9% of its revenues in June, while the Netherlands giant ASML also attributed 49%. Perhaps even more interesting is the expected outlook for 2025, which shows no signs of slowing down. The Chinese semiconductor industry must establish complete self-sufficiency, and massive capital expenditures are expected to continue.

Latest reports indicate that sanctioned Chinese PC hardware manufacturer DeepCool's products have appeared on major US online marketplaces under the brand "Shaking Tank," as revealed by YouTuber Greg Salazar on social media platform X. This comes two months after the US State Department sanctioned DeepCool for alleged business with Russian firms involved in the Ukraine conflict, barring US sales and imports of their products. Despite this, retailers like Amazon and Newegg list apparent DeepCool products under the Shaking Tank brand. These listings show product renders with the DeepCool logo blurred or removed. Fan hubs previously displaying the DeepCool emblem now show blank spaces, and product packaging has obscured identifying marks. Examples include the DeepCool AK620 and LS720 models, now advertised as ShakingTank AK620 and LS720.

The nature of this rebranding still needs to be clarified. While DeepCool adopting a new name to bypass sanctions would likely face severe legal consequences, more plausible explanations include a reseller rebranding remaining inventory or retailers clearing sanctioned stock. This situation questions trade sanctions' effectiveness and enforcement in the global marketplace, leaving consumers uncertain about DeepCool's future in the US market and potential impacts on international trade regulations.

The US Department of the Treasury on Wednesday, sanctioned 16 Chinese tech companies involved in supporting the Russian wartime economy, or supplying goods to blacklisted Russian firms, as the war in Ukraine rages on. A surprising name on this list is Beijing Deepcool Industries, the company behind the popular PC cooling, casing, and power supply brand Deepcool. A US State Department release announcing the sanctions, described Deepcool as supplying $1 million worth common high-priority items list (CHPL) goods. These are items that could directly or indirectly support the Russian war-effort in Ukraine. "BEIJING DEEPCOOL INDUSTRIES CO LTD is a PRC-based company involved in the supply of over $1 million worth of CHPL items to Russian companies, including the U.S.-designated, Russia-based AKTSIONERNOE OBSHCHESTVO TASKOM and OOO NOVYI AI TI PROEKT," the State Department release says.

Meanwhile, the executive aspect of the sanctions are handled by the Treasury Department, which restricts all transactions by US firms to the 16 newly sanctioned Chinese companies, which include Deepcool. What this means is that the US-end of Deepcool must immediately cease operations, as it cannot transact any business with its parent company in China. Sale of Deepcool product will also stop, as US residents cannot conduct any business with the company. This could also mean that the US-based subsidiary of Deepcool may not be in a position to provide aftersales support to existing customers in the country.

According to sources familiar with the matter and reported by Bloomberg, the Biden administration is considering imposing further export controls to limit China's ability to acquire advanced semiconductor technologies crucial for developing AI systems. Gate-all-around (GAA) transistor technology and high-bandwidth memory (HBM) chips are at the center of the proposed restrictions. These cutting-edge components play a pivotal role in creating powerful AI accelerators. GAA transistors, a key feature in next-generation chips, promise substantial improvements in power efficiency and processing speeds. Meanwhile, HBM chips enable high-speed data transfer between a processor and memory. While existing sanctions prevent American firms from supplying Chinese companies with equipment for manufacturing leading-edge chips, concerns persist that China could still attain advanced capabilities through other means.

For instance, China's leading chipmaker, SMIC, could potentially integrate GAA transistors into its existing 7 nm process node, markedly enhancing performance. Access to HBM would further augment China's ability to develop AI accelerators on par with cutting-edge offerings from US firms. The reflections within the Biden administration show a strategic effort to preserve America's technological edge by denying China access to key semiconductor innovations. However, implementing such stringent export controls is a delicate balancing act, as it risks heightening tensions and prompting Chinese retaliation. No final decision has been made, and officials continue weighing the proposed restrictions' pros and cons. Nonetheless, the discussions highlight the pivotal role that semiconductor technology plays in the great power rivalry between the US and China, especially in the AI era.

According to The Information, in a strategic maneuver to circumvent the constraints imposed by US sanctions, Huawei is accelerating efforts to establish domestic production capabilities for High Bandwidth Memory (HBM) within China. This move addresses the limitations that have hampered the company's advancements in AI and high-performance computing (HPC) sectors. HBM technology plays a pivotal role in enhancing the performance of AI and HPC processors by mitigating memory bandwidth bottlenecks. Recognizing its significance, Huawei has assembled a consortium comprising memory manufacturers backed by the Chinese government and prominent semiconductor companies like Fujian Jinhua Integrated Circuit. This consortium is focused on advancing HBM2 memory technology, which is crucial for Huawei's Ascend-series processors for AI applications.

Huawei's initiative comes at a time when the company faces challenges in accessing HBM from external sources, impacting the availability of its AI processors in the market. Despite facing obstacles such as international regulations restricting the sale of advanced chipmaking equipment to China, Huawei's efforts underscore China's broader push for self-sufficiency in critical technologies essential for AI and supercomputing. By investing in domestic HBM production, Huawei aims to secure a stable supply chain for these vital components, reducing reliance on external suppliers. This strategic shift not only demonstrates Huawei's resilience in navigating geopolitical challenges but also highlights China's determination to strengthen its technological independence in the face of external pressures. As the global tech landscape continues to evolve, Huawei's move to develop homegrown HBM memory could have far-reaching implications for China's AI and HPC capabilities, positioning the country as a significant player in the memory field.

A recent Reuters investigation has uncovered evidence suggesting Chinese universities and research institutes may have circumvented US sanctions on high-performance NVIDIA GPUs by purchasing servers containing the restricted chips. The sanctions tightened on November 17, 2023, prohibit the export of advanced NVIDIA GPUs like the consumer GeForce RTX 4090 to China. Despite these restrictions, Reuters found that at least ten China-based organizations acquired servers equipped with the sanctioned NVIDIA GPUs between November 20, 2023, and February 28, 2024. These servers were purchased from major vendors such as Dell, Gigabyte, and Supermicro, raising concerns about potential sanctions evasion. When contacted by Reuters, the companies provided varying responses.

Dell stated that it had not observed any instances of servers with restricted chips being shipped to China and expressed willingness to terminate relationships with resellers found to be violating export control regulations. Gigabyte, on the other hand, stated that it adheres to Taiwanese laws and international regulations. Notably, the sale and purchase of the sanctioned GPUs are not illegal in China. This raises the possibility that the restricted NVIDIA chips may have already been present in the country before the sanctions took effect on November 17, 2023. The findings highlight the challenges in enforcing export controls on advanced technologies, particularly in the realm of high-performance computing hardware. As tensions between the US and China continue to rise, the potential for further tightening of export restrictions on cutting-edge technologies remains a possibility.

NVIDIA's freshly unveiled "Blackwell" B200 and GB200 AI GPUs will be getting plenty of coverage this year, but many organizations will be sticking with current or prior generation hardware. Team Green is in the process of shipping out compromised "Hopper" designs to customers in China, but the region's appetite for powerful AI-crunching hardware is growing. Last year's China-specific H800 design, and the older "Ampere" A800 chip were deemed too potent—new regulations prevented further sales. Recently, AMD's Instinct MI309 AI accelerator was considered "too powerful to gain unconditional approval from the US Department of Commerce." Natively-developed solutions are catching up with Western designs, but some institutions are not prepared to queue up for emerging technologies.

NVIDIA's new H20 AI GPU as well as Ada Lovelace-based L20 PCIe and L2 PCIe models are weakened enough to get a thumbs up from trade regulators, but likely not compelling enough for discerning clients. The Telegraph believes that NVIDIA's uncompromised H100 AI GPU is currently in use at several Chinese establishments—the report cites information presented within four academic papers published on ArXiv, an open access science website. The Telegraph's news piece highlights one of the studies—it was: "co-authored by a researcher at 4paradigm, an AI company that was last year placed on an export control list by the US Commerce Department for attempting to acquire US technology to support China's military." Additionally, the Chinese Academy of Sciences appears to have conducted several AI-accelerated experiments, involving the solving of complex mathematical and logical problems. The article suggests that this research organization has acquired a very small batch of NVIDIA H100 GPUs (up to eight units). A "thriving black market" for high-end NVIDIA processors has emerged in the region—last Autumn, the Center for a New American Security (CNAS) published an in-depth article about ongoing smuggling activities.

A 2019-signed export license has allowed Intel to supply laptop processors to Huawei, under an exclusive deal—this US Government approved arrangement was not viewed favorably by AMD. The rival chipmaker apparently missed out on the securing of a similar trade license back in 2021. According to a new Reuters report, Team Red and a handful of supporters have attempted to revoke Intel's license—worth hundreds of millions of dollars. Two anonymous sources allege that: "Intel has survived an effort to halt chip sales to Huawei...giving one of the world's largest chipmakers more time to sell to the heavily sanctioned Chinese telecoms company." Intel and Huawei's symbiosis is set to end later this year—folks on the inside reckon that the current US administration will not approve a renewal. Reports suggest that Qualcomm is not anticipating a renewal either—Huawei is an approved buyer of Snapdragon chips, but industry whispers indicate an eventual shift to in-house fare.

Intel, Huawei, US Commerce Department and the White House have declined to comment on the aforementioned scenario. Reuters also sent a query to AMD, but the publication did not receive a response. Earlier last year, a government official revealed that "Huawei's licensing policy" was under review, alongside a general push to scrap a number of trade deals. According to insiders, the same government official allegedly told companies—in private—that the US Commerce Department would fix "the licensing discrepancy." Another anonymous source believes that the agency shelved these plans late last year, for reasons unknown—they stressed that there is potential for a revival. Given the upcoming expiry of Intel and Huawei's arrangement—within the year—it makes little sense to implement a drastic change.

NVIDIA's H800 AI GPU was rolled out last year to appease the Sanction Gods—but later on, the US Government deemed the cutdown "Hopper" part to be far too potent for Team Green's Chinese enterprise customers. Last October, newly amended export conditions banned sales of the H800, as well as the slightly older (plus similarly gimped) A800 "Ampere" GPU in the region. NVIDIA's engineering team returned to the drawing board, and developed a new range of compliantly weakened products. An exclusive Reuters report suggests that Team Green is taking pre-orders for a refreshed "Hopper" GPU—the latest China-specific flagship is called "HGX H20." NVIDIA web presences have not been updated with this new model, as well as Ada Lovelace-based L20 PCIe and L2 PCIe GPUs. Huawei's competing Ascend 910B is said to be slightly more performant in "some areas"—when compared to the H20—according to insiders within the distribution network.

The leakers reckon that NVIDIA's mainland distributors will be selling H20 models within a price range of $12,000 - $15,000—Huawei's locally developed Ascend 910B is priced at 120,000 RMB (~$16,900). One Reuters source stated that: "some distributors have started advertising the (NVIDIA H20) chips with a significant markup to the lower end of that range at about 110,000 yuan ($15,320). The report suggests that NVIDIA refused to comment on this situation. Another insider claimed that: "distributors are offering H20 servers, which are pre-configured with eight of the AI chips, for 1.4 million yuan. By comparison, servers that used eight of the H800 chips were sold at around 2 million yuan when they were launched a year ago." Small batches of H20 products are expected to reach important clients within the first quarter of 2024, followed by a wider release in Q2. It is believed that mass production will begin around Spring time.

The Chinese semiconductor industry is advancing, and interestingly, it is growing rapidly under sanctions, even with the blacklisting of companies by the US government. China's semiconductor industry is mainly represented by companies like Semiconductor Manufacturing International Corp (SMIC) and Huawei Technologies, who are leading the investment and progress in both chip manufacturing and chip design. According to the latest interview with Bloomberg, former TSMC Vice President Burn J. Lin said that the US government and its sanctions can not stop the advancement of Chinese semiconductor companies. Currently, Lin notes that SMIC and Huawei can use older machinery to produce more advanced chips.

Even so, SMIC could progress to 5 nm technology using existing equipment, particularly with scanners and other machinery from ASML. Development under sanctions would also force China to experiment with new materials and other chip packaging techniques that yield higher performance targets. SMIC has already developed a 7 nm semiconductor manufacturing node, which Huawei used for its latest Mate 60 Pro smartphone, based on Huawei's custom HiSilicon Kirin 9000S chip. Similarly, the transition is expected to happen to the 5 nm node as well, and it is only a matter of time before we see other nodes appear. "It is just not possible for the US to completely prevent China from improving its chip technology," noted Burn J. Lin.

Phytium, a Chinese semiconductor company that faced U.S. government sanctions from 2021, has introduced its latest data center processor, the 64-core Feiteng Tengyun S2500. Designed for cloud and high-performance computing applications, this processor features a large-capacity shared L3 cache, enhanced security capabilities for cloud servers, and improved memory subsystem reliability. The Feiteng Tengyun S2500 features 64 FTC661 cores developed by Phytium, which are based on Armv8 ISA. Reportedly, the CPU features 64 MB of L3 cache and 512 KB of L2 per core, bringing the total to 96 MB of processor cache. Compared to the previous generation line, the S2500 brings an L3 cache and TDP of 150 Watts, up from 90 Watts of previous generation.

This is Phytium's first new CPU in several years, raising questions about its production capacity and access to foundries, given its sanctions-related restrictions. It is currently unknown which foundry will manufacture the Feiteng Tengyun S2500, and we expect to hear more about it as (if) units get shipped. So far only display units have made appearance. Nonetheless, the company has continued its hardware development efforts and garnered interest in collaborating with Huawei to unify hardware and software ecosystems, which has yet to come to fruition.

NVIDIA could be adjusting its enterprise-grade GPU production strategies for the Chinese market, according to an article published by MyDriver—despite major sanctions placed on semiconductor imports, Team Green is doing plenty of business with tech firms operating in the region thanks to an uptick in AI-related activities. NVIDIA offers two market specific accelerator models that have been cut down to conform to rules and regulations—the more powerful and expensive (250K RMB/~$35K) H800 is an adaptation of the western H100 GPU, while the A800 is a legal market alternative to the older A100.

The report proposes that NVIDIA is considering plans to reduce factory output of the A800 (sold for 100K RMB/~$14K per unit), so clients will be semi-forced into purchasing the higher-end H800 model instead (if they require a significant number of GPUs). The A800 seems to be the more popular choice for the majority of companies at the moment, with the heavy hitters—Alibaba, Baidu, Tencent, Jitwei and ByteDance—flexing their spending muscles and splurging on mixed shipments of the two accelerators. By limiting supplies of the lesser A800, Team Green could be generating more profit by prioritizing the more expensive (and readily available) model.

China announced on Monday (June 3) that it would restrict exports of two rare metals——both crucial materials in the computer chip manufacturing process. The nation's Ministry of Commerce stated that their new measures were necessary to "safeguard national security and interests". The Chinese government is contending with several sanctions from Western countries—most notably their access to advanced semiconductor manufacturing equipment is now heavily controlled. Reuters has contacted a number of foundries about the potential impact of rare material shipment limitations. Taiwan Semiconductor Manufacturing Company (TSMC) has shrugged it off as a minor inconvenience, their spokesperson stated: "After evaluation, we do not expect the export restrictions on raw materials gallium and germanium will have any direct impact on TSMC's production. We will continue to monitor the situation closely."

WIN Semiconductors Corp—a Taiwanese firm that specializes in the provision of gallium arsenide wafers—informed the news agency about its low-level reliance on Chinese mineral sources. They are able to sidestep and procure gallium and germanium from suppliers located in Germany, Japan, and North America. The Japanese Semiconductor Equipment Association stated that it was too early to tell whether China's export restrictions will result in material shortages. Supply chains could be disrupted to some degree due to China controlling over 90% of the world's gallium and germanium production, but DigiTimes Asia proposes that new sanctions will not prohibit production and export activities. According to experts in the field supply lines will continue to operate, with buyers required to jump through some extra hoops in order to gain approval for certain market segments. The purification of gallium and germanium is mostly controlled by American and Japanese entities—the processed form of these metals is used in semiconductor production—DigiTimes reckons that these firms will probably feel the initial impact of new trade restrictions.

The top technology companies in China have been ordering a lot of NVIDIA enterprise-grade GPUs, even though U.S. sanctions have prevented the shipment of A100 and H100 models (plus AMD's MI250 Instinct accelerator) to the nation in recent times. ByteDance - best known for developing TikTok - managed to grab plenty of Ampere enterprise units prior to last Autumn's cutoff period, and has continued to purchase Team Green's H800 GPU, which is a cut-down version of the H100 flagship. Smaller outfits are relying on less direct sources to acquire HBC GPUs—according to a Reuters investigative article, international trade restrictions have created a thriving black market for "top-end NVIDIA AI chips."

Their reporters carried out some on-site sleuthing: "Visiting the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen is a good bet - in particular, the SEG Plaza skyscraper whose first 10 floors are crammed with shops selling everything from camera parts to drones. The chips are not advertised but asking discreetly works...They don't come cheap. Two vendors there, who spoke with Reuters in person on condition of anonymity, said they could provide small numbers of A100 artificial intelligence chips made by the U.S. chip designer, pricing them at $20,000 a piece - double the usual price."

The U.S. Patent Office tribunal has ruled in favor of Intel Corp in a significant $2.2 billion case against VLSI Technology LLC. Intel's bid to nullify a patent that constituted $1.5 billion of a $2.18 billion verdict it previously lost to VLSI in 2021 was accepted. The Patent Trial and Appeal Board invalidated the computer chip-related patent and another VLSI patent, accounting for the rest of the Texas federal court verdict. An Intel spokesperson expressed their satisfaction with the decision, criticizing the invalidated VLSI patents as "low-quality."

VLSI, the company holding the patent that has filed several infringement lawsuits against Intel, retains the option to appeal both decisions to the U.S. Court of Appeals for the Federal Circuit. In a separate case last year, VLSI secured a verdict worth $949 million against Intel in Texas. VLSI is a subsidiary of Fortress Investment Group, which is managed by investment funds from SoftBank Group. The patent board proceeding was initiated by South Dakota-based Patent Quality Assurance LLC, while another patent from the $2.18 billion verdict was contested by OpenSky Industries LLC. Despite initial sanctions for attempting to extort both Intel and VLSI, OpenSky was permitted to continue the proceeding with Intel at the helm.

The United States government has imposed sanctions on companies exporting their goods to China with the aim of limiting the country's technological advancements. This forced many companies to reduce their shipments of the latest technologies; however, according to the latest information from The Wall Street Journal, the Biden administration will allow companies to keep expanding their production capacities in China. As the source notes, quoting statements from government officials, the top semiconductor makers such as Samsung, SK Hynix, and TSMC, all of which have a chip production facility in China, will be allowed to expand the production capacity without any US backlash.

Of course, this does not contradict the plan of a US export-control policy, which the administration plans to continue. Alan Estevez, undersecretary of commerce for industry and security, noted last week in the industry gathering that the US plans to continue these restrictions for another year. Reportedly, all manufacturers of wafer fab equipment (WFE) from the US must acquire an export license from the Department of Commerce before exporting any tools for making either logic of memory chip indented for customers in China. Chipmakers Samsung, SK Hynix, and TSMC all received their licenses to export from October 2022 to October 2023. However, the US government now allows these companies to continue upgrading their Chinese plans beyond the renewed license expiry date of October 2024.

Russian business news outlet Kommersant has learned from industry figures that prices of natively-designed computer processors have been on the rise since the beginning of 2023. Domestic manufacturers of PC, server and storage systems are requiring greater supplies of CPUs designed by Baikal Electronics and MCST - the publication posits that growing demand and logistical issues have become the root cause of recent climbs in cost - individuals involved in the computer hardware supply chain have suggested that some processor models have doubled in price. Sergey Ovchinnikov, the chief executive of Norsi-Trans (a server and data storage firm) provided comment: "Production of Russian chips at foreign fabs has become more complex, leading to extended logistics chains and, consequently, an increase in the cost of the final component." International trade sanctions have not prevented the arrival of fresh silicon into the region - Ovchinnikov claims that an unnamed foundry is able to supply (likely via proxy) Russian developers with computer processors.

Kommersant's investigation found out that Baikal's BE-T1000 CPU is now sold for roughly $110 (8900 Rubles) at a popular computer hardware e-tailer (ChipDip) in the region. The very basic dual core MIPS32r5 (28 nm) processor was readily available for $50 (3990 rubles) back in 2018, so its price has risen by 220% in recent times. TSMC was contracted as the manufacturer of Baikal's BE-T1000 CPU, and the Taiwanese foundry started producing these SoCs in 2016. A Baikal Electronics representative has denied any involvement in driving up MSRP, and states that it is up to distributors and retail outfits to determine prices. The company suspects that very old stock is being sold at inflated rates - Kommersant was unable to contact anyone at ChipDip for a statement.

According to the South China Morning Post (SCMP) sources, Yangtze Memory Technologies Corp (YMTC) has been plotting to manufacture its advanced 3D NAND flash using locally sourced equipment. As the source notes, YMTC has placed big orders from local equipment makers in a secret project codenamed Wudangshan, named after the Taoist mountain in the company's home province of Hubei. Last year, YTMC announced significant progress towards creating 200+ layer 3D NAND flash before other 3D NAND makers like Micron and SK Hynix. Called X3-9070, the chip is a 232-layer 3D NAND based on the company's advanced Xtacking 3.0 architecture.

As the SCMP finds, YTMC has placed big orders at Beijing-based Naura Technology Group, maker of etching tools and competitor to Lam Research, to manufacture its advanced flash memory. Additionally, YTMC has reportedly asked all its tool suppliers to remove all logos and other marks from equipment to avoid additional US sanctions holding the development back. This significant order block comes after the state invested 7 billion US Dollars into YTMC to boost its production capacity, and we see the company utilizing those resources right away. However, few industry analysts have identified a few "choke points" in YTMC's path to independent manufacturing, as there are still no viable domestic alternatives to US-based tool makers in areas such as metrology tools, where KLA is the dominant player, and lithography tools, where ASML, Nikon, and Canon, are noteworthy. The Wuhan-based Wudangshan project remains secret about dealing with those choke points in the future.

TrendForce reports that the US Department of Commerce recently released details regarding its CHIPS and Science Act, which stipulates that beneficiaries of the act will be restricted in their investment activities—for more advanced and mature processes—in China, North Korea, Iran, and Russia for the next ten years. The scope of restrictions in this updated legislation will be far more extensive than the previous export ban, further reducing the willingness of multinational semiconductor companies to invest in China for the next decade.

CHIPS Act will mainly impact TSMC; and as the decoupling of the supply chain continues, VIS and PSMC capture orders rerouted from Chinese foundries
In recent years, the US has banned semiconductor exports and passed the CHIPS Act, all to ensure supply chains decoupling from China. Initially, bans on exports were primarily focused on non-planar transistor architecture (16/14 nm and more advanced processes). However, Japan and the Netherlands have also announced that they intend to join the sanctions, which means key DUV immersion systems, used for producing both sub-16 nm and 40/28 nm mature processes, are likely to be included within the scope of the ban as well. These developments, in conjunction with the CHIPS Act, mean that the expansion of both Chinese foundries and multinational foundries in China will be suppressed to varying degrees—regardless of whether they are advanced or mature processes.

According to news agencies residing within Russian territories, it has been widely reported that Cisco has destroyed an inventory of unsold equipment with a total worth of $23.5 million. TASS, a Kremlin-controlled news organization, has made reference to account statements provided by Cisco Systems (the remaining legal entity of the Cisco Group based within the Federation) - it reports that the equipment was "physically destroyed" in January 2023, post a termination of sales in Russia and Belarus. The financial statements outline the liquidation of "primarily spare parts," but the agency claims that Cisco engaged in the destruction of network hardware, demo units and office furniture.

Cisco was one of the first tech companies to withdraw from Russian territories, following the full-scale invasion of the Ukraine. Soon after the beginning of the conflict, Cisco Systems announced the cessation of its business dealings, starting with a stoppage of sales in March 2022. A June deadline was specified for a complete shutdown of operations. The company made a decision by August 2022 to dispose of unsold inventories located within affected territories - the necessary permits for re-export of goods had not been obtained. It is not clear whether U.S. sanctions (against Russia) played a part in influencing the North American tech company's decision to engage in a scorched earth policy and obliterate the physical remnants of stock plus premises in Russia and Belarus.