Executive Summary

The United States has long used export controls to prevent the proliferation of advanced semiconductors and the inputs necessary to produce them. Semiconductors underpin virtually all aspects of economic and technological development, therefore impacting national and international security. The United States and a small number of democratic allies are sole producers of advanced semiconductors and many key inputs necessary to manufacture them, creating the option of using export controls as nonproliferation tools. In particular, the United States has recently tightened semiconductor export controls on China, given the country’s efforts to build its own semiconductor industry to answer the demands of “Made in China 2025” and address overreliance of Chinese high-technology industries on imports for semiconductors.

Currently, the United States applies multiple types of semiconductor export controls on China. While these controls all involve lists, “list-based controls” is a term of art that refers to a list of specific technologies whose export is controlled. “End-use and end-user controls” refer to lists of prohibited end-uses for exported technologies and end-users that cannot receive exports. To export any controlled items, exporters must obtain export licenses—which can be denied by licensing officers.

List-based controls cover exports of various types of semiconductor manufacturing equipment (SME), chips, materials, software, and technical data to all Chinese entities (public and private). Export license decisions are made on a case-by-case basis, historically resulting mostly in approvals.

• Among SME, these controls cover some types of lithography, deposition, ion implanting, testing, and wafer handling tools, but not etching, process control, assembly, and wafer manufacturing tools.
• Among high-end semiconductors, these controls cover field-programmable gate arrays (FPGAs), partly cover central processing units (CPUs), and do not cover graphics processing units (GPUs); it remains unclear whether they cover application-specific integrated circuits (ASICs) customized for artificial intelligence.
• Among materials, these controls cover certain types of masks, resists, consumable gases, wafers, and materials that become wafers and chips.
• Among software, these controls cover software used with or to help produce SME, but not electronic design automation (EDA) software used to design chips.
• Technical data associated with the above technologies is also controlled.
• These controls also require U.S. employers to apply for “deemed export licenses” for Chinese nationals who would access controlled technical data or source code in the United States during their employment.

On top of the list-based controls broadly applied to China, end-use and end-user controls apply additional, more stringent controls on certain Chinese end-uses and end-users—with wider technology coverage and presumption of denial of export licenses.

• Recent “entity listings” cover certain public and private semiconductor-related entities, including chip designers and end-users (like Huawei), various Chinese supercomputing entities, and Chinese chipmakers (like Fujian Jinhua). These controls typically cover all semiconductor technologies.
• Other controls capture the Chinese military and civilian Chinese entities supporting the military or engaging in military end-uses. These controls cover many types of chips (including CPUs, FPGAs, and AI ASICs, but probably not GPUs) and a wide variety of SME.
• However, the United States allows some Chinese semiconductor firms that follow certain requirements as Validated End-Users (VEUs) to import otherwise controlled technologies under a general license.

U.S. semiconductor exports to China have increased in recent years because of permissive export licensing policy and declining technology coverage of export controls, but these trends may be changing.

• In particular, exports of SME more than doubled from 2014 to 2019, especially owing to fewer U.S. SME being controlled. Exports of semiconductors also increased in this period, although exports of materials declined.
• However, the United States has recently been tightening semiconductor export controls with stricter licensing policies (including for deemed exports for Chinese nationals), stricter controls on major Chinese entities like Huawei, and expanded military end-use and end-user controls to cover a wider range of Chinese end-uses and end-users.