New BIS ECAD Software Control Unlikely to Cause Immediate Concern, Chip Industry Officials Say

New multilateral export controls on certain electronic computer-aided design (ECAD) software won’t have an immediate effect on semiconductor companies and are unlikely to cause wide concern in the short term, industry officials said. The controls, announced by the Bureau of Industry and Security Aug. 15 (see 2208120038) and effective in October, seek to restrict an emerging technology that may not be commercially available for at least two years, although officials say it remains unclear what exactly the restrictions will cover.

BIS is soliciting feedback on the controls, which will apply export licensing requirements on ECAD software “specially designed for the development of integrated circuits with any Gate-All-Around Field-Effect Transistor (GAAFET) structure.” One semiconductor industry executive, who requested anonymity to speak candidly, said the BIS rule aims to restrict “the most advanced chips that have not yet hit the market.”

“Instead of controlling something that's already widely available in the market -- thereby very difficult to have an effective control -- I think the goal of government here is to look forward, try to get ahead of the technology,” the executive said in a recent interview, adding that BIS is likely intending to restrict ECAD software used to produce 2 nanometer chips and below. “I think this is a reasonable attempt by the government to look at truly emerging technology that gives a major advantage to the U.S. and its allies and partners.”

U.S. technology companies for years have warned BIS against overbroad controls that could stifle innovation and decrease U.S. competitiveness (see 2201100010, 2012230069 and 1911070014). While the rule appears to be narrowly targeted and is based on a control agreed to at the multilateral Wassenaar Arrangement, the semiconductor industry will likely still seek additional clarity on “implementation,” the executive said. BIS also likely will use the rule to solicit feedback to better help it craft the scope of the control.

“Because most of the software has not yet hit the market. We don't really know whether or not ECAD software is going to be specially designed for one technology or whether it's technology architecture agnostic,” the executive said. The person said BIS is likely trying to understand: “Is there software either today or tomorrow that may be specially designed? And is there foreign availability? Are there other vendors outside the United States that can produce specially designed ECAD software for gate-all-around semiconductors?”

The restrictions are unlikely to draw strong backlash from the U.S. chip industry because most of the “dominant players” for ECAD software are American companies, an industry analyst said in a recent interview. This reduces the likelihood that their customers will turn to foreign competitors.

And even if BIS restricts exports of the ECAD software to Chinese companies, the person said American chip exporters have a range of potential customers to sell to, including potentially Taiwan Semiconductor Manufacturing Company in Taiwan or Samsung in South Korea. “The demand for these tools and products will flow to other entities that are not restricted,” the analyst said.

In an August article for Chinese government-owned Beijing News, Fu Wei, an assistant researcher at Tsinghua University’s Internet Governance Research Center, said the restrictions are specifically aimed at preventing Chinese companies from making advancements in GAAFET technology and limiting Chinese chip design to 3 nanometers and above. But Fu also said the controls could backfire on the U.S.

“Extensive tool and software restrictions will inevitably have an impact on the global manufacturing supply chain, which is not beneficial to the current precarious inflationary pressure in the United States,” Fu wrote, according to an unofficial translation. “In addition, large-scale [ECAD] disruptions [to] supply will accelerate the localization process and third-party product substitution, which is not what the United States wants to see.”

The rule comes as BIS considers tightening restrictions over the types of semiconductors and chipmaking equipment that can be exported to China (see 2207150023). The review could lead to new or updated controls on semiconductor manufacturing equipment, revisions to the agency’s end-user policies and additions to the Entity List, the semiconductor industry executive said.

“I think the industry recognizes that there's going to be increased government scrutiny, oversight and regulation of exports,” the person said. “We want to make sure that as the government contemplates export controls in our industry, that they are carefully crafted to address clearly defined and objective national security goals.”