Intel China Fab Puts Spotlight on U.S. Export Policy

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Intel China Fab Put Spotlight on U.S. Export Policy

Intel’s announcement on March 26 to build a 300 mm fab with 90 nm technology in Dalian, while China has called attention to U.S. restrictions on exporting high technology to China. The project would be among the first 300 mm fabs built in China, and the first fab in China by Intel which also operates fabs in the U.S., Israel and Ireland. While Intel currently uses 65 nm in many operations today and 90 nm technology will be widespread in 2009, this announcement adds additional energy to the ongoing political debate over U.S. export controls to China.

Intel reports that the facility is slated to begin operation in 2010 and has received export license approval. Intel has worked extensively over the last year with the Departments of Defense, Commerce, State and others to review their security procedures, the technology, equipment, materials, and other aspects of the project. After this extensive review process, export license approval was given that allows use of 90 nm technology with the potential ability to upgrade over time.

Exports to China are a hot topic in Washington. In fact, the U.S. Commerce Department is actively considering some significant changes to China export licensing policy. These changes include a proposed streamlining of license requirements for pre-approved “trusted customers” in China. If adopted, this proposal could help expedite licensing of semiconductor equipment to major Chinese customers.

On the other hand, the proposal also would subject a broader range of semiconductor equipment to licensing requirements. SEMI has raised concerns about this proposal with the government, particularly since the new controls would be unilateral and the technologies covered are not militarily significant. Without the support of our trading partners, these controls would be ineffective given widespread foreign availability in the industry. Because of concerns raised by SEMI and others in the technology industry, the Commerce Department is revising the proposal and hopes to finalize the new requirements within the next few months.

Representing the industry’s interests on China licensing policy is just part of what SEMI does on export controls. In addition to meetings with key officials to discuss the industry’s views, we coordinate the industry’s input into the multilateral Wassenaar Arrangement’s review of the control list each year. The Washington office actively monitors what is happening on Capitol Hill and meets with congressional offices to educate them about export control policy and the semiconductor equipment and materials industry.

One of our premier export-related activities was the third annual export control and customs seminar held March 23 at SEMICON China. Organized with the American Electronic Association, this seminar attracted a standing room only crowd of over 180 attendees to hear from experts from the U.S. and Chinese governments and industry. The program focused on many of the practical aspects of export controls and customs and served as an educational session for China-based companies that face these issues when purchasing products from overseas suppliers.

During the seminar, Alex Lopes, a U.S. Department of Commerce official said his agency is revising the proposed changes to China licensing policy and believes a new rule can be finalized within a few months. "It was one of the rules that caused the most stir," said Mr. Lopes. "The department is working feverishly to address those comments."

While it is uncertain what specific rules the Commerce Department will finally publish, it is assured the new policy will have a significant impact on the industry. The Intel plant in China alone will be supported with over $1 billion in semiconductor equipment. Export rules that limit the participation of U.S. equipment suppliers in the fastest growing market in the world will not only impact existing suppliers, but may also create additional incentives for new entrants into the market by Chinese firms. SEMI remains committed to pushing for rational export control policies that promote a level playing field for semiconductor equipment and materials producers while protecting national security.