US Puts China’s Phytium on Entity List for Making Missiles Using Western Tech

Article By : Alan Patterson

Tianjin Phytium Information Technology Co. is one of seven companies that the US put on its Entity List after the Washington Post reported that China used American and Taiwanese chip technology to create the world's first hypersonic missiles.

Tianjin Phytium Information Technology Co. is one of seven companies that the US put on its Entity List after the Washington Post reported that China used American and Taiwanese chip technology to create the world’s first hypersonic missiles.

Phytium used American EDA tools to design chips that were manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC) for use in a supercomputer which simulated the performance of DF-17 hypersonic missiles that China rolled out at its 2019 October 1 National Day parade, according to the Washington Post report.

The DF-17 appears designed to evade ballistic missile defense systems deployed by the US and its allies in the Pacific, according to a report in The National Interest.  A hypersonic missile strike could help to eliminate ballistic missile defense systems, increasing the lethality of a subsequent missile strike, allowing near complete destruction of infrastructure such as runways and hangars, tipping the scales of a conflict, according to the Institute for National Defense and Security Research (INDSR), a Taiwan government-funded think tank.

Hypersonic missile
An artist’s rendering of a hypersonic missile. (Source: US Department of Defense)

“Supercomputing capabilities are vital for the development of many — perhaps almost all — modern weapons and national security systems, such as nuclear weapons and hypersonic weapons,” US Secretary of Commerce Gina M. Raimondo said in a statement. “The Department of Commerce will use the full extent of its authorities to prevent China from leveraging US technologies to support these destabilizing military modernization efforts.”

In addition to Phytium, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi, and the National Supercomputing Center Zhengzhou are the latest organizations that the US placed on the Entity List.

The US Department of Commerce said all the entities are involved with building supercomputers used by China’s military actors, its destabilizing military modernization efforts, and/or weapons of mass destruction programs.

The latest addition to the Entity List by the administration of US President Joe Biden follows similar actions by his predecessor, Donald Trump, who blacklisted telecom equipment maker Huawei, chipmaker Semiconductor Manufacturing International Corp. and other Chinese companies during his presidency as part of a US-China trade war.

China’s new hypersonic glide missile (HGM) may be powerful enough to penetrate US missile shields in the Western Pacific, switching Beijing’s strategy in the Taiwan Strait from defense to offense, according to the South China Morning Post.

Hypersonic glide vehicles (HGV) are launched on traditional ballistic missiles, but instead of entering outer space, they remain within the atmosphere, using fins to steer and glide at supersonic speeds until reaching their targets. Fins on HGVs allow them to be guided to a selectable range of targets more dynamically than a traditional ballistic missile. This flexibility at low altitude makes HGVs nearly impossible to intercept with a ballistic missile defense system, according to a report from US think tank RAND.

Chips and geopolitics

This latest development highlights how the semiconductor industry has become increasingly linked with geopolitics. Taiwan’s TSMC, with the world’s most advanced process technology, makes semiconductors that have dual-use applications in military hardware and consumer products. The company has been a sole supplier of chips to companies in the US and China that range from Apple to ZTE, until ZTE landed on the US Entity List.

The same chips that TSMC produces may end up in weapons that could be used to attack Taiwan, a democratically ruled island that China claims is a renegade province.

“TSMC is a law-abiding company,” TSMC deputy spokesperson Nina Kao said in an email to EE Times. “TSMC has a rigorous export-control system in place, including a robust assessment and review process on shipments to specific entities that are subject to export control restrictions.  Moreover, TSMC has put in place processes to help identify abnormal circumstances in a transaction with follow-up due diligence.  With these processes already in place, we are not aware of a product manufactured by TSMC that was destined for military end-use as alleged.”

TSMC makes chips “that end up being used for military purposes by both the United States and China,” Si-fu Ou, a fellow at Taiwan’s INDSR, said in the Washington Post report.

In addition to TSMC, Phytium is a customer of US EDA tools suppliers Cadence Design Systems and Synopsys, according to the report. A Cadence media contact did not respond to calls from EE Times for comment. Synopsys’ media contact didn’t respond to email from EE Times requesting comments. The websites of the two US companies provided no information in response to the report regarding Phytium.

Taiwan chip design firm Alchip has been an intermediary between Phytium and TSMC, according to the Washington Post.

Alchip has used its AI and high-performance computing strength to win capacity from TSMC at the most advanced 7nm and 5nm nodes, Alchip CEO Johnny Shen said in an interview with EE Times. The company, which was founded in China, has customers in China, Japan, Europe and the US.

Alchip’s Chinese customers “worry a lot” about eventually being restricted from using TSMC as a chip foundry, Shen said during the July 2020 interview.

“They don’t they don’t need to work directly with TSMC, and they focus on system architecture design,” Shen said. “We do the chip for them, and TSMC does the manufacturing for them. I think this kind of work distribution will ease certain concerns for US control.”

Alchip CEO Shen today said to EE Times, “Alchip is working with both its customer and suppliers to fully investigate the situation and will not comment further on the situation until that investigation is complete.”

Excerpts of this report are from Patterson’s book, China’s Next Target: Taiwan.

This article was originally published on EE Times.

Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.

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