American specialists hold key positions in China’s chip industry, helping to develop new chips to catch up with foreign competitors. Now those workers are in uncertainty because of new US export control rules that bar US citizens from supporting advanced Chinese chip design.
At least 43 top executives working at 16 publicly traded Chinese semiconductor companies are American citizens, according to a review of company filings and official websites, conducted by The Wall Street Journal. Many of them hold senior positions, from CEO to vice president and chairman of the board.
Almost all of the executives moved to China’s chip industry after spending years working in Silicon Valley for U.S. chip makers or semiconductor equipment firms, according to company filings. Their work histories show the free flow of talent across companies and borders over the years. Some have been attracted to China through initiatives including the Thousand Talents program, which was launched in 2008 by the Chinese government to raise research standards.
This month, the US Department of Commerce imposed export controls on a number of microcircuits and their manufacturing technologies, which became the US’s biggest blow to date against the Chinese technology industry.
With the decision, which caught the industry by surprise, the department also sought to limit the use of American know-how by prohibiting American citizens from supporting advanced chip design or manufacturing in China without a license. According to the Department’s definition, US persons are US citizens, permanent residents, persons residing in the US, and US companies.
Several companies, including Beijing-based Naura Technology Group Co. and Dutch equipment manufacturer ASML Holding NV, suspended their American employees.
Restricting Chinese companies’ access to American expertise is a direct blow to China’s attempt to move up the technology chain, said Dane Chamorro, head of global risk and intelligence at Control Risks, a Washington, D.C.-based business consulting firm.
“Technology is nothing without the people there make it work,” he said.
According to Chamorro, for many senior executives of Chinese companies, the rule will likely force them to choose between jobs and US citizenship or permanent resident status. The rules require all US citizens to apply for a license to continue working for Chinese companies involved in the development of advanced chips.
Notable American executives in China include Gerald Yin, founder and chairman of Advanced Micro-Fabrication Equipment Inc. or AMEC, one of China’s largest suppliers of chip manufacturing equipment. He and six of AMEC’s current top managers and top researchers are American citizens, according to the company’s website and its most recent annual report.
While talent retention — along with all the other constraints — could significantly slow the growth of China’s chip sector, it won’t be enough to kill it, said Ann Hecker, a partner at consulting firm Bain & Co. in its semiconductor group.
“There’s one thing China has been very consistent about — their need to build up an indigenous source of semiconductors,” she said. “They will continue to put a lot of money in it, and they will continue to progress.”
Many companies, including KLA Corp. and Lam Research, have already suspended engineers and other less senior staff in China while they seek clarity on regulations or licenses to continue their work.
Naura Technology Group, which has a semiconductor equipment division, has warned its U.S. employees in mainland China to suspend work with customers it believes are subject to the new restrictions while it waits for more clarity, a company spokesman said. According to him, these employees continue to perform other tasks in the company.
ASML, a Dutch chip maker, has confirmed that it has sent out internals to its American employees asking US personnel — both US citizens and foreign nationals residing in America — to refrain from servicing, supplying or providing support to any of its customers in China until further notice.
The new rules could also affect employees of Chinese companies operating in the U.S. Yangtze Memory Technologies Co, a leading Chinese memory chip maker, has an office in Santa Clara, Calif., with more than a dozen employees in the US, according to LinkedIn data. These include Director of Engineering, Head of NAND Development in the US, and Head of North American Sales.