US Sanctions Against China Could Turn It Into a Legacy Node Powerhouse

The US has levied stiff sanctions on China to prevent it from acquiring the latest technologies made by Western companies. There's a catch, though: Those sanctions are only supposed to keep advanced technology out of Chinese hands, and they do nothing to prevent the country from producing legacy technology. As such, the country could soon become a global powerhouse in legacy node manufacturing.

According to a new report from SCMP, production of legacy nodes in China rose by 40% in the first quarter of 2024, indicating there could be some "unforeseen consequences" to US sanctions, to quote Dr. Vance from the Black Mesa Research Facility. This sizable boost in legacy node production suggests Chinese fabs are expanding their efforts into technologies where they have free reign, which could lead to them eventually cornering the market for mature nodes.

China is also producing its own homegrown CPUs, which are banned from export in a Uno Reverse card scenario. Credit: Windows1089, CC BY-SA 4.0 via Wikimedia Commons

The latest numbers show China produced 98.1 billion total integrated circuits in the first quarter, with demand for legacy chips mainly driven by increased sales of electric vehicles. EV output increased by 29.2% in the first quarter. In comparison, smart phone output also rose over 16%, indicating these are the primary drivers behind the recent surge in integrated circuit output. Overall, the number of circuits produced in the first quarter is triple what it was in the same quarter in 2019, highlighting how rapidly China's IC industry is expanding.

US sanctions towards China only apply to advanced technologies, which excludes nodes that are 28nm or older, according to Tom's Hardware. None of these chips are considered "dangerous" enough to be sanctioned, as they typically aren't used for military purposes. Also, though these chips were all designed many moons ago, they still power the bulk of global devices ranging from car sensors to IoT devices, consumer electronics, and more. This could give China increased sway in global supply chains going forward, with researchers claiming US sanctions have effectively "backfired" given the country's increased legacy node output.