China circumvents US chip sanctions by buying used, banned equipment

As the U.S. government plans to implement stricter constraints on the Chinese semiconductor sector, China-based chipmakers are ramping up their purchases of wafer fab equipment (WFE) to ensure that production of fabs continues. However, Chinese companies are being discreet with their purchases as some of those violate U.S. sanctions, reports DigiTimes.

Companies such as SMIC, HuaHong, Nexchip, and Silan Microelectronics are on a spending spree, purchasing both new and second-hand tools, according to the story that provides a source with knowledge of the situation. Some of the WFE they have purchased can’t be shipped to China as this would violate the U.S.-imposed sanctions, which is the reason that many purchases are done discreetly.

Huawei, who currently has several sanctions by the U.S. government and legally cannot procure anything containing advanced U.S. technology without permission, is buying up more wafer fab tools. 

Chinese companies are not permitted to buy tools for making 14nm-class chips and those using more advanced fabrication technologies. Only SMIC can produce chips on such sophisticated nodes.  

The US is working with Japan and the Netherlands on further restrictions for Chinese semiconductor makers.  At this stage, it has not been made clear what these restrictions will be and when they will be imposed.