Intel Tested Chipmaking Tools from Firm with Sanctioned China Units, Raising Security Concerns

Chipmaker Intel has tested advanced "wet etch tools" this year from Fremont, California-based ACM Research, a toolmaker with sanctioned units in Shanghai and South Korea.

The move, aimed at potentially integrating the tools into Intel's most advanced 14A chipmaking process (due in 2027), has triggered significant national security alarms among US lawmakers and China hawks.

Intel tested two wet etch tools from ACM Research, which are used to remove material from silicon wafers. The tools were tested for Intel's 14A manufacturing process, its most advanced chipmaking line. Two of ACM Research's overseas units were sanctioned by the U.S. last year over allegations of supporting the Chinese government's efforts to use commercial technology for military purposes and advanced chip development. ACM denies the allegations.

Intel declined to comment on the 14A testing but stated that ACM's tools "are not used in our semiconductor production process, and we comply with all applicable U.S. laws and regulations." ACM confirmed the delivery of multiple tools from its Asian operations to domestic U.S. customers for testing, some of which have met performance standards.

China hawks and former officials voiced strong opposition to Intel's evaluation of ACM's equipment. Critics cite concerns over the potential transfer of Intel's sensitive technological know-how to China, the displacement of trusted Western suppliers, and the risk of Beijing remotely or physically manipulating the equipment to "degrade or even halt U.S. chip production."

Chris McGuire, a former White House National Security Council official, called the testing an example of "egregious gaps in U.S. technology protection policies."

Concerns are growing among lawmakers who recently reintroduced legislation to bar chipmakers receiving billions in U.S. government subsidies (like Intel) from using Chinese equipment in their government-backed expansion plans.

ACM is still a small player but ranks 24th globally in the semiconductor equipment market. Their tools, and those of Chinese counterparts, are significantly cheaper (20% to 30%) than rivals like Applied Materials and Lam.

ACM sells equipment to sanctioned Chinese chipmakers like SMIC (accounting for 14% of ACM's sales) and YMTC, as well as CXMT, named by the Defense Department as Chinese military-backed. While headquartered in California, most of ACM's research and development takes place at its facility in Shanghai, China.

ACM opened a new facility in Hillsboro, Oregon, near Intel's R&D plant, which an analyst report suggests is aimed at supporting its relationship with Intel.