Semiconductor Equipment Export Rules to China

Under current U.S. rules, most semiconductor manufacturing equipment can be exported to China only with a license, and many advanced tools are subject to a presumption of denial or outright prohibition. Specifically, equipment for making chips with linewidths below 14 nanometers (and certain 16/14nm-class logic chips), advanced memory (3D NAND with more than 128 layers, DRAM below 18nm half-pitch), and related materials and software are restricted. This article explains what is allowed, what is banned, and how the rules work in practice.

Background: Why Export Controls Exist

The U.S. government restricts semiconductor equipment exports to China for national security reasons. The concern is that advanced chips made with U.S. equipment could be used in military systems, supercomputers, or AI that might threaten U.S. interests. The controls are not new, but they were significantly tightened in October 2022 and again in October 2023, expanding the scope of what requires a license and making it harder to obtain one.

The rules are implemented by the Bureau of Industry and Security (BIS) under the Export Administration Regulations (EAR). The key list is the Commerce Control List (CCL), which assigns Export Control Classification Numbers (ECCNs) to specific types of equipment. Items not on the CCL are designated EAR99 and generally do not require a license for export to China (though other restrictions may apply).

What Is Restricted: The Core Banned Items

The most significant restrictions target equipment used to produce advanced logic and memory chips. Here are the main categories:

• Logic chips: Equipment for fabricating logic chips with a production linewidth of 14nm or below (e.g., FinFET or GAAFET structures) is restricted. This includes lithography, etch, deposition, and other tools if they are specifically designed for that purpose.
• Memory chips: Equipment for making DRAM with a half-pitch of 18nm or below, and 3D NAND with more than 128 layers, is restricted.
• Advanced packaging: Tools for chiplet packaging (e.g., hybrid bonding) that enable advanced integration are also controlled.
• Specific ECCNs: Examples include 3B001 (certain lithography equipment), 3B002 (masks and reticles), and 3B991 (general semiconductor manufacturing equipment). The latter is controlled for national security reasons, but many items under 3B991 are not restricted for China unless they meet certain parameters.

It is important to note that the restrictions are not simply based on the tool’s name or type, but on its technical specifications, such as resolution, overlay accuracy, and wafer size. A lithography machine that can only produce 28nm chips may be allowed, while one that can do 7nm is not.

What Is Allowed: The Gray Areas

Not all semiconductor equipment is banned. The following categories are generally allowed, though a license may still be required:

• Mature-node equipment: Tools for chips at 28nm and above (e.g., 40nm, 65nm, 90nm) are generally allowed, as they are considered less of a national security risk. However, a license may be required if the equipment is destined for a military end user or military end use.
• Equipment for other industries: Tools used for making LEDs, solar cells, power semiconductors (e.g., IGBTs), and MEMS devices are often not restricted, even if they share some technology with chip fabs.
• Test and packaging equipment: Many testers, probers, and packaging tools are not on the restricted list, unless they are specifically for advanced packaging.
• Spare parts and consumables: Generally, spare parts that are not themselves controlled are allowed, but they must not be for a controlled item that is already banned.

In practice, the distinction is often about the capability of the tool. For example, an etch tool that can etch 14nm features is restricted, but a similar tool for 28nm may not be. Companies must check the exact specifications of their equipment against the CCL.

How the Licensing Process Works

If you want to export a controlled item to China, you must apply for a license from BIS. The process involves:

1. Determine your ECCN: You must classify your equipment under the CCL. This is often done by the manufacturer, who provides an ECCN in the datasheet.
2. Check the China rules: BIS has a specific rule for China (the “China Military End Use/End User” rule) that requires a license for many items that would otherwise be allowed.
3. Submit a license application: You submit an application through the Simplified Network Application Processing (SNAP) system, providing details about the equipment, the end user, and the end use.
4. BIS reviews: BIS reviews the application, often consulting with the Department of Defense and other agencies. They consider the item’s technical capabilities, the end user’s history, and the potential for military use.
5. Decision: BIS can approve, deny, or return the application. For advanced items, the policy is a presumption of denial, meaning they will only approve in rare cases (e.g., for servicing U.S. companies’ own fabs in China).

The process can take months, and there is no guarantee of approval. Even if the item is not on the restricted list, a license may be required if the end user is on the Entity List (e.g., Huawei, SMIC) or if the end use is military.

Common Problems and Misconceptions

A common misconception is that all U.S.-origin equipment is banned. In fact, many tools are allowed, and the restrictions are specific to advanced nodes. Another misconception is that the rules only apply to new equipment; they also apply to used equipment, re-exports, and even transfers within China (e.g., moving a tool from one Chinese fab to another).

Another problem is that the rules are complex and change frequently. For example, in October 2023, BIS added new restrictions on equipment for advanced packaging and on certain materials (like gallium and germanium compounds) that are used in chips. Companies must stay up to date with the Federal Register notices.

A practical issue is that many equipment manufacturers are not U.S. companies (e.g., ASML is Dutch, Tokyo Electron is Japanese), but they still use U.S. technology and components, so they are subject to the rules. This means that even non-U.S. equipment may be restricted if it contains more than a certain percentage of U.S.-origin content (the “de minimis” rule).

Comparison with Other Countries’ Rules

The U.S. rules are not the only ones. The Netherlands and Japan have also imposed restrictions on advanced semiconductor equipment, largely in coordination with the U.S. For example, the Netherlands restricts the export of EUV lithography machines to China, and Japan restricts certain etching and deposition tools. These restrictions are similar in scope but not identical.

China has responded by investing heavily in domestic equipment development, but it still relies on imported tools for many processes. The U.S. rules have also led to a slowdown in China’s advanced chip production, but they have not stopped it entirely.

Costs and Alternatives

The cost of compliance can be significant. Companies must invest in export compliance programs, hire specialists, and potentially lose sales. For U.S. equipment makers, the restrictions mean they cannot sell to China’s largest fabs, which is a significant revenue loss. Some companies have responded by developing “China-specific” versions of their tools that are less advanced and therefore not restricted.

Alternatives for Chinese buyers include buying from non-U.S. suppliers (e.g., from China’s domestic companies like Naura and AMEC), or buying used equipment that may fall below the restrictions. However, used equipment is often still subject to the rules if it was originally made in the U.S.

Frequently Asked Questions

Can I export a used 14nm lithography machine to China?

No. The restrictions apply to equipment regardless of whether it is new or used. A 14nm lithography machine is on the restricted list, so a license is required, and the presumption of denial means it will likely be denied.

Does the rule apply to equipment made in another country?

Yes, if the equipment uses U.S.-origin technology or components above the de minimis threshold (usually 25% for most items, but 0% for some advanced items). For example, a Japanese etch tool that uses a U.S. controller may be restricted.

What happens if I export without a license?

You could face civil penalties (fines) or criminal prosecution, and you may be placed on the Entity List, which prohibits you from receiving any U.S. items in the future. The penalties can be severe, including jail time for willful violations.

Is there a way to get a license for a restricted item?

Yes, but it is rare. BIS may approve a license if the end user is a U.S. company’s wholly-owned subsidiary in China, and the equipment is for maintenance or repair of existing tools, not for new production. Each case is reviewed individually.

Are there any exceptions for research or educational purposes?

There are limited exceptions for certain research and educational uses, but they are narrow. For example, a university may be able to import a controlled item for basic research, but they must apply for a license and demonstrate the end use is not military.

How can I find out if my equipment is restricted?

Check the ECCN on the equipment’s datasheet. If it is 3B001 or 3B002, it is likely restricted for advanced nodes. You can also consult with a licensed export compliance professional or use BIS’s online classification tool.

Related

• Italian Sports Sedan Maintenance Costs Explained
• Headphones vs Speakers: How to Choose the Right Option
• Google Wallet Features I Wish I Knew Sooner