China's state-backed labs provide a lifeline for US-blacklisted chip suppliers
Beijing fosters pilot production lines at research centers and boosts the nation's R&D spending
CHENG TING-FANG and LAULY LI
February 5, 2025 05:59 JST
TAIPEI -- Chinese chip and chip equipment makers blacklisted by the US are turning to universities and state-backed chip labs and "pilot production lines" to keep their development efforts on track.
Facilities in major cities from Wuhan to Wuxi to Ningbo offer vital test production and verification services that help accelerate China's chip developments, often enjoying easier access to overseas technology, according to sources briefed on the matter.
Hubei Yangtze Pilot-Line Services, better known as Hubei Yangtze Memory Labs, in Wuhan, is just one example. Engineers from Yangtze Memory Technologies Co. (YMTC) -- the nation's top NAND flash memory chipmaker -- use the laboratory to verify new chip designs before putting them into mass production because it has a 12-inch pilot production line and better access to foreign equipment and services than blacklisted entities do, sources told Nikkei Asia.
Hubei Yangtze Memory Labs describes itself as an independent legal entity approved by the Hubei provincial government, and it is led by a government official.
was added to the US trade blacklist in 2022.
Yangtze Memory Technologies Co., China's top NAND flash memory chipmaker. (Photo by Cheng Ting-Fang)
Top Chinese chip measurement machine maker Shanghai Precision Measurement Semiconductor Technology, or PMISH, has also become a key stakeholder in Hubei Yangtze Memory Labs and is focusing on advanced chip packaging projects for high-performance computing and storage, special sensors and optoelectronics integration, according to the company. PMISH, a rival to KLA of the US, was added to Washington's
last December, along with other major Chinese chip equipment makers.
Labs like this are crucial, one China-based chip industry executive told Nikkei Asia. "Some labs offer services to benchmark equipment and materials, to compare local offerings of machines with leading global standards, which are very important for domestic engineering work. .. . Sometimes a team, before investing lots of money, can go to these labs to prove that the product really works before putting it into mass production."
Other examples include JFS Laboratory in Wuhan, which has built pilot production lines specializing in various types of compound semiconductors, including gallium nitride (GaN) and silicon carbide (SiC). These materials are crucial for developing highly efficient power electronics, vital for applications in the automotive, data center and aerospace sectors, areas where China sees itself as having a competitive advantage, in part because they are subject to fewer restrictions from the US
JFS, which is backed by Hubei province, says it has attracted scientists educated at top global universities including Cambridge University, Stanford University, Massachusetts Institute of Technology and Nanyang Technological University. Its many ongoing projects include helping Chinese chipmaking equipment teams verify their locally developed machines and tools for laser cutting and etching. It also has pilot production lines for silicon photonics, an area seen as a key next-generation technology for enabling faster data transmission for AI computing.
Chip Hub for Integrated Photonics Xplore (CHIPX), operated by the prestigious Shanghai Jiao Tong University, recently launched China's first pilot production line for high-end photonic chips, in Wuxi, Jiangsu province. The line is set to provide services from the first quarter of this year.
Yongjiang Laboratory (Y-LAB) in Ningbo, Zhejiang province, founded in 2021, launched a research and development production line for heterogeneous chip integration and micro-nano optics last year. It has set a target of sharply expanding its staff from 400 members last year to 800 scientists this year and 3,000 by 2030.
Several other labs with pilot production platforms related to semiconductor development have sprouted up across China over the past few years, including in Guangzhou, Tianjin, Zhengzhou and Shenzhen. Their target areas range from sensors and chip packaging and testing to advanced materials and compound semiconductors.
Beijing has encouraged local authorities to promote more "pilot production lines" or "small-scale test production lines" run by universities or research institutes in partnership with chip and tech companies, viewing them as vital platforms for fostering the nation's technological development.
The Chinese State Council last September issued a directive instructing all major cities and provinces to actively promote and facilitate the setup of a wide range of pilot production platforms till 2027 with specialties in different industries. This state-driven initiative is much broader than only semiconductors, as it aims to foster development across the entire value chain, from materials, metals, chemicals and machinery to cutting-edge technologies like quantum computing, robotics, AI, aerospace and satellite navigation, according to government documents seen by Nikkei Asia.
A Shanghai Precision Measurement Semiconductor Technology employee stands next to a giant mock-up chip at Semicon China, a trade fair for the semiconductor industry in Shanghai in June 2023. © Reuters
Boosting research centers' equipment and investment and enhancing engineering schools have become key tactics for China in its battle against U.S. export controls, as it is much easier for research institutes to engage international collaborations and to access American and European technologies.
According to Nikkei Asia's analysis, China has been building more chip and microelectronics schools in recent years, broadening its access to fundamental technologies and cultivating more homegrown talent since 2020.
In 2023 and 2024 alone, at least 10 universities established new semiconductor schools, including North China University of Technology, Shanghai Jiao Tong University, Nanjing University of Aeronautics and Astronautics, and Harbin Institute of Technology's Shenzhen branch, of which the latter two have been blacklisted by Washington. The specialties of these chip schools span a variety of segments, such as electronics automation design (EDA), chip production equipment and advanced chip production.
China has also been ramping up its R&D investment, particularly since the U.S.-China tech war broke out. According to the country's Bureau of Statistics, nationwide R&D spending reached a record of more than 3.3 trillion yuan ($458 billion) in 2023, nearly double the level in 2017, the year Donald Trump began his first term as U.S. president. The U.S. put Huawei Technologies on the trade blacklist from 2018, and later blacklisted a range of Chinese tech champions, including contract chipmaker Semiconductor Manufacturing International Corp. (SMIC) and the world's biggest drone maker, DJI.
During the administration of President Joe Biden, Washington continued to escalate tensions with multiple rounds of
, expanded trade blacklists and regulations on leading foreign chip suppliers such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung, curbing their dealings with Chinese clients.
Trump's return to the White House in January has brought few signs that trade relations will improve. As the president's new blanket 10% tariffs on Chinese goods took effect, Beijing
with tariffs of its own on various imports from America, including energy and agricultural machinery.