As the US continues to tighten restrictions on high technology in China, US-based chip equipment makers will reportedly tell suppliers to find alternatives to Chinese-made components.
Chip equipment makers, including California-based Applied Materials (AMAT) and Lam Research (LRCX), have told suppliers they are concerned about risking their supplier status for using certain Chinese-supplied components, the Wall Street Journal reported, citing unnamed people familiar with the matter. The companies have also told suppliers they cannot have Chinese investors or shareholders, people told the Journal.
Both companies verbally told suppliers to find alternatives, but did not communicate this through official guidelines or agreements, the Journal reported. Finding alternatives to China could increase costs, industry executives told the Journal, because prices would likely be incomparable.
Applied Materials told the Journal it is looking for alternative suppliers to ensure components are available.
“Lam Research diligently adheres to U.S. export controls, which also apply to the companies in the supply chain that support chip manufacturing,” a Lam Research spokesperson said in a statement shared with Quartz. “To facilitate compliance with these rules and strengthen the resilience of our global supply network, Lam routinely shares information with our suppliers to promote their awareness and compliance with current and updated trade restrictions.”
Applied Materials did not respond to a request for comment from Quartz.
Earlier this year, sources told Bloomberg that Chinese tech giant Huawei and its chipmaker partner Semiconductor Manufacturing International Corp. used technology from Applied Materials and Lam Research to create its advanced 7-nanometer chip for the Mate 60 Pro smartphone. SMIC was already in possession of the US technology before the US Commerce Department banned US companies from supplying Chinese companies with advanced chips and chip manufacturing equipment in October 2022, sources told Bloomberg.
In October, the head of Dutch chip equipment company ASML (ASML) said he expects more pressure on US allies to curb chip sales to China. Christophe Fouquet, CEO of ASML, said at the Bloomberg Tech Summit that most of its business in China is focused “on mainstream semiconductors,” which is “very different from AI.” Existing US restrictions on China leave the country “10 to 15 years behind when it comes to advanced technology,” Fouquet said.
Late last month, the US finalized restrictions on investments in sensitive technologies in China by US individuals and companies. The rules cover three categories of technology: semiconductors, quantum computers and artificial intelligence. Some investments are prohibited, while others require notification to the U.S. government.
This story has been updated with a statement from Lam Research.
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