WASHINGTON China's growing semiconductor prowess, which by one official estimate has narrowed that nation's technology gap with the West to less than two years, is rekindling debate over what critics warn is the lack of a clear U.S. export-control policy toward China's emerging IC industry. With foreign investment and technology flooding into China's chip sector, the smoldering export-control issue heated up earlier this year with the release of a government report calling for a sweeping review of U.S. dual-use export controls on IC manufacturing equipment to China.
The debate flared again in recent weeks following the revelation that Texas Instruments Inc. and China's Semiconductor Manufacturing International Corp. (SMIC), based in Shanghai, are forming a foundry alliance to fabricate "noncritical" interconnect layers of TI's 0.13-micron chips.
Murky U.S. export controls on dual-use technologies have generally used 0.25-micron design rules as the threshold for shipping chip-manufacturing equipment to politically sensitive spots like China. Indeed, U.S. officials noted that nothing is stipulated about micron levels in export regulations for manufacturing equipment. A voluntary international agreement contains stricter limits, but the United States is the only country that worries about China's acquisition of high-end IC-manufacturing gear. Hence, U.S. officials said, export licenses like the one involving TI and SMIC are reviewed on a case-by-case basis.
This practice makes many export-control advocates nervous. "The administration has not articulated a public policy" on exports to China, said William Reinsch, former undersecretary of Commerce for export administration. "I'm not sure what their policy is. One would hope there is a criterion for case-by-case reviews."
Congress has also gotten into the act, even though for the past decade it has failed to reauthorize key legislation designed to update U.S. export laws. Sen. Fred Thompson, R-Tenn., a member of the Senate Governmental Affairs Committee, directed the U.S. General Accounting Office to examine advances in Chinese IC-manufacturing capability and the rationale behind U.S. export controls on chip-making technology.
The concern is that advanced manufacturing technologies might be used to develop high-end chips that could find their way into Chinese weapons. "I don't think the administration has its act together" on high-tech export controls, a Senate source said.
The GAO study, released in April, found not only that China has narrowed the semiconductor technology gap, but that "U.S. policies and practices to control the export of semiconductor technology to China are unclear and inconsistent, leading to uncertainty among U.S. industry officials about the rationale for U.S. government licensing decisions."
GAO recommended that the Commerce, Defense and State departments, all of which have a hand in shaping controls for dual-use technologies, reexamine U.S. export policies and update them as necessary to reflect advances in IC manufacturing technology. The agencies disagreed, saying current policies are adequate for making export-licensing decisions related to China. The agencies' view on export controls is that "everything's fine," said Stephen Lord, one of the authors of the GAO report.
Many interested parties, both in and out of government, said they believe the U.S. export policy toward China is intended to keep that country two generations behind state-of-the-art chip-manufacturing capabilities. U.S. officials dispute this. The GAO study found that China's most advanced fabs are currently only one generation behind commercial state-of-the-art technology.
Overseas chip makers operating in China are restricted from producing logic chips below 0.25 micron. Among the few exceptions are DRAMs and other types of memory chips.
Industry sources said one way that Texas Instruments appears to have finessed U.S. export controls to earn approval of its deal with SMIC was to process chips using 0.13-micron design rules in the United States, then send those chips to SMIC for metal-layer processing using 0.25-micron design rules.
According to the GAO study, regulators approve most licenses for exports of IC-manufacturing equipment and materials to China, but there are exceptions. Some approvals set conditions on how equipment can be used, but investigators found that the Commerce Department doesn't conduct "end-use" checks to determine if licensing conditions are being met.
U.S. efforts to control chip technology "have been complicated by the globalization of the industry and foreign competitors' views that transfers of this technology to China are not a matter for concern," the report warned.
Commerce Department officials overseeing U.S. export controls could not be reached for comment. In response to the GAO report, Commerce Secretary Donald Evans denied that U.S. policy aims to keep China two generations behind leading-edge chip makers. U.S. policy "specifies a case-by-case determination of license applications based on specific facts," Evans said.