Chinese companies are filling warehouses with chip-making equipment in preparation for more restrictions

In short: Chinese companies are preparing for further import restrictions from the US, the Netherlands, and Japan by stockpiling chip-making equipment, components, spare parts, and materials. Sources said some companies are stockpiling large warehouses with goods in preparation for further sanctions.

Last month brought news that the Netherlands and Japan had reached an agreement with the US to impose restrictions on the export of advanced chip-manufacturing tools to China, although the sensitivity of the deal meant that the details not yet announced.

The South China Morning Post reports that news of the agreement has seen China’s biggest semiconductor firms racing to stockpile chipmaking gear in preparation for further restrictions on advanced equipment. According to a source involved in the industrial supply chain, a company in Beijing is “filling several large warehouses” with materials and components. Some of the items are not even on the US export control list.

An unnamed source in Tokyo that buys Japanese products for Chinese customers confirmed that some companies are overbuying components and equipment for fear of tighter export restrictions. by the way – this is even though Tokyo has not yet started the process. Japanese companies are waiting for guidance on the new rules, which are expected to be implemented this April.

Dutch giant ASML, the world’s largest supplier of lithography machines used in the chip manufacturing process, has been banned from selling its most advanced extreme ultraviolet (EUV) lithography equipment, which costs around $164 million per unit, to Chinese customers because it can’t get an export. license from the Dutch government due to pressure from the United States. Following the three-country agreement, ASML is also prohibited from selling at least some of its old deep ultraviolet (DUV) lithography equipment to Chinese clients.

The US has tightened chip-related sanctions on China over the past 12 months. The restrictions introduced in October are designed to cap the country’s logic chips at the 14-nanometre node, DRAM at 18nm, and 3D NAND flash at 128 layers. The US says it will prevent its rival from developing semiconductors for military applications, including supercomputers, nuclear weapon modeling, and hypersonic weapons. The restrictions will also have a major impact on the Made in China 2025 plan for reducing the country’s dependence on foreign chipmakers.

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