Semiconductor Firms Brace for Hardening China Export Controls
Equipment and chip makers are navigating a tightening web of U.S., Dutch, and Japanese restrictions that limit access to advanced nodes and critical components.
U.S. export controls on shipments to Chinese customers have increased notably since 2020. Lattice Semiconductor notes that the U.S. government continues to add Chinese companies to restricted party lists and has expanded the list of advanced integrated circuits and destinations requiring export authorization. These restrictions often operate under a policy of denial for specific export licenses.
Regulatory pressure is extending beyond U.S. borders. ACM Research flagged that the Netherlands implemented supplemental export controls in December 2023 on sensitive goods, software, and technology. These Dutch and Japanese restrictions limit the ability of ACM Shanghai to acquire parts necessary to fulfill customer requirements.
Companies are shifting focus toward older process nodes to maintain revenue. PDF Solutions expects customers to remain on 28nm and 14nm nodes due to restrictive economics or technological barriers. While PDF Solutions expects China's semiconductor investment to continue, export restrictions limit its business with Chinese manufacturers on advanced nodes.
Operational constraints now extend to human capital and capital markets. PDF Solutions cited limits on the ability of foreign national engineers to access technical information under U.S. export laws. ACM Research expects an increased regulatory burden for investments in the PRC due to the COINS Act, which may restrict its ability to raise capital through private investments until 2026 or 2027.
Supply chain volatility is further compounded by reciprocal trade actions. China has responded to U.S. measures by implementing its own export controls, which may result in shortages of key materials for foundry partners. PDF Solutions also flagged that the exchange of tariffs and retaliatory actions could increase prices and put downward pressure on economic activity.
Exposure remains high despite these headwinds. Axcelis Technologies reported that international sales accounted for 83.7% of total revenue in 2024, with ion implanter system shipments to Asia representing 76.0% of total system revenue.
These overlapping controls are forcing a reallocation of resources. Lattice Semiconductor warned that licensing requirements may constrain the ability to optimize engineering activities in non-U.S. jurisdictions, potentially forcing the reallocation of resources to higher-cost locations.