According to Tom's Hardware the US wants to expand its sanctions and has signed up Japan and the Netherlands to support it.

The US wants to restrict Chinese chipmakers' access to wafer fabs that can be used to make chips in the 40nm class.  If all the restrictions are imposed and no export licences are granted for the sale of advanced chip-making equipment to SMIC and other Chinese chipmakers, it'll set back the People's Republic's semiconductor industry by at least a decade. Wafer Fab Equipment (WFE) manufacturers will suffer, which could affect the entire industry, although ASML, the world's leading manufacturer of lithography equipment, will be less affected than its American and Japanese competitors.

Export restrictions announced last week by the Dutch government prevent the supply of ASML's Twinscan NXT:2000i, NXT:2050i and NXT:2100i scanners, the company's most advanced DUV lithography equipment. However, 17 US-based chipmakers require an export licence from the US Department of Commerce and the new restrictions means that number will double. This will hurt Applied Materials, KLA and Lam Research.

Recently, SMIC said that one of its upcoming 300-mm fabs will start mass production a quarter or two later than expected because it couldn't get the necessary tooling in time. However, if the US succeeds in stopping the sale of 28nm-capable tools to SMIC, the foundry will have to rethink its plans for new production facilities.

If China wants to make its semiconductor industry self-sufficient and introduce advanced production nodes, it'll have to ensure that its fab tool manufacturers - such as AMEC (lithography), Kingsemi (etch, deposition) and Naura (etch) - can keep up with their American and European competitors. That will take years, because AMEC's most advanced scanners can only make ICs on a 90nm node, a technology used to make CPUs in the early 2000s.

If SMIC loses its ability to produce crisps on 28nm, 14nm/12nm and more advanced manufacturing processes, hundreds of Chinese chip designers will have to outsource production to companies like TSMC, UMC, GlobalFoundries and Vanguard. This is certainly good for these contract manufacturers, but it'll be disastrous for SMIC the Chinese semiconductor industry.