Inside China's Race to Develop Chiplets and Bypass US Export Bans

Thursday - February 8 2024, 07:27 UTC - 9 months ago

Sanctions from the US have limited China's access to certain chipmaking technologies, hindering their ability to produce more advanced products. However, the use of chiplets offers a potential workaround and has led to investment from the Chinese government and venture capitalists. These modular chips allow for cheaper production, easier upgrades, and improved performance, particularly in industries like AI. Developing advanced packaging technologies will be key for China to fully leverage chiplets, which could provide much-needed self-reliance in the semiconductor industry.

For the past couple of years, US sanctions have had the Chinese semiconductor industry locked in a stranglehold. While Chinese companies can still manufacture chips for today’s uses, they are not allowed to import certain chipmaking technologies, making it almost impossible for them to produce more advanced products.

There is a workaround, however. A relatively new technology known as chiplets is now offering China a way to circumvent these export bans, build a degree of self-reliance, and keep pace with other countries, particularly the US.

In the past year, both the Chinese government and venture capitalists have been focused on propping up the domestic chiplet industry. Academic researchers are being incentivized to solve the cutting-edge issues involved in chiplet manufacturing, while some chiplet startups, like Polar Bear Tech, have already produced their first products.

In contrast to traditional chips, which integrate all components on a single piece of silicon, chiplets take a modular approach. Each chiplet has a dedicated function, like data processing or storage; they are then connected to become one system. Since each chiplet is smaller and more specialized, it’s cheaper to manufacture and less likely to malfunction. At the same time, individual chiplets in a system can be swapped out for newer, better versions to improve performance, while other functional components stay the same.

For those companies, chiplets are one of several ways that the semiconductor industry could keep increasing the computing power of chips despite their physical limits. But for Chinese chip companies, they could reduce the time and costs needed to develop more powerful chips domestically and supply growing, vital technology sectors like AI. And to turn that potential into reality, these companies need to invest in the chip-packaging technologies that connect chiplets into one device. "Developing the kinds of advanced packaging technologies required to leverage chiplet design is undoubtedly on China’s to-do list," says Cameron McKnight-MacNeil, a process analyst at the semiconductor intelligence firm TechInsights. "China is known to have some of the fundamental underlying technologies for chiplet deployment." .

The US government has used export blacklists to restrict China’s semiconductor industry development for several years. One such sanction, imposed in October 2022, banned selling to China any technology that can be used to build 14-nanometer-generation chips (a relatively advanced but not cutting-edge class) as well as more advanced ones.

For years, the Chinese government has looked for ways to overcome the resulting bottleneck in chipmaking, but breakthroughs in areas like lithography—the process of using light to transfer a design pattern onto the silicon base material—could take decades to pull off. Today, China still lags in chip-manufacturing capability relative to companies in Taiwan, the Netherlands, and elsewhere. "Although we’ve now seen [China’s Semiconductor Manufacturing International Corporation] produce seven-nanometer chips, we suspect that production is expensive and low yield," says McKnight-MacNeil.