RESPONSE TO QUESTIONS OF SEMICONDUCTOR EXPORT

UNCLAS STATE 109118 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: CH ECON ETRD ETTC KSTC PARM PREL TW SUBJECT: RESPONSE TO QUESTIONS OF SEMICONDUCTOR EXPORT CONTROLS REF: TAIPEI 1305 ¶1. (U) This cable provides answers to the questions posed by Taiwan in reftel concerning the licensing of dual-use semiconductor manufacturing equipment (SME) for use in China. AIT is requested to provide the following answers to the questions posed by Taiwan. ¶2. (U) Would the USG have any objection to Taiwan lowering its minimum feature size limit to 0.13 microns (130 nm)? The USG would not object to Taiwan lowering its minimum feature size limit to 130 nm for Taiwan firms established in the PRC. The USG has approved license applications for SME to certain FABS/foundries in the PRC with conditions at the 130 nm technology node. ¶3. (SBU) What are the current U.S. restrictions on semiconductor manufacturing equipment sold or transferred to entities in the PRC? The USG reviews each individual license application for SME to the PRC on a case-by-case basis based on the end-use, end-user, and in particular, the material contribution it could make to China,s military modernization. ¶4. (SBU) What conditions are placed on these exports? License conditions may vary depending on the consignee and end-use, however, in general, an approved license for the export of SME from the U.S. to the PRC would contain conditions that address the following: a. Use restrictions with regard to a specific technology node b. Use restrictions for military end-users and embargoed destinations c. Compliance assurances from the consignee d. Restrictions on modifications and upgrades e. Restrictions on re-export, transfer, and resale f. Use restrictions limiting the equipment for the production of uncontrolled devices. ¶5. (U) Are U.S. restrictions under review for possible further relaxation? Revisions to SME controls must be approved by all Wassenaar Arrangement participating states prior to implementation of those changes by each state. Each year, the USG petitions the WA on appropriate updates to the control criteria in the area of SME and integrated circuits. ¶6. (SBU) Could the USG provide details on what the USG approved for the Intel semiconductor foundry currently under construction in China? The USG is precluded by law from providing details on individual export license transactions. ¶7. (U) How might U.S. export control regulations affect the re-export from Taiwan to China of foundry production equipment originally procured from the U.S.? Most SME does not require a license for export from the U.S. to Taiwan (except certain MOCVD systems, MBE systems, and in some cases, wafer handling systems),however, the re-export of SME originally procured from the U.S. that meets the criteria as defined in Supplement No. 1 to Part 774, Category 3B001 of the Export Administration Regulations from the Taiwan to the PRC would require an approved re-export license from the USG. Approved re-export licenses will be conditioned as detailed in (4) above. ¶8. (U) Although Taiwan did not specifically request U.S. feedback on this issue, please comment on the need to control technology transfers as par of effectively controlling regime items? The U.S. controls technology for the development and production of SME in the same manner as the actual equipment. This technology is useful in establishing an indigenous production capability for SME and therefore, a concern to the USG. Technology license applications are also reviewed on a case-by-case basis. The USG has approved license applications for the transfer of development and production technology to companies in the PRC on a limited basis; mostly to U.S. subsidiaries. The U.S. believes that control of technology is equally if not more important than the control of actual items. The U.S. would note that in some case the multilateral regimes control the technology for development and production of an item even when the actual item itself is not controlled. ¶9. (U) The U.S. appreciates the chance to respond to Taiwan on these issues and looks forward to continuing this dialogue. RICE NNNN End Cable Text