US tightens grip on chip exports to China

The Biden administration is poised to unveil a new rule next month that strengthens its control over semiconductor manufacturing equipment exports to China, two sources familiar with the rule said.

This move aims to impede China’s advancements in supercomputing and artificial intelligence (AI) technologies that could potentially benefit its military.

Shipments from key chipmaking equipment exporting allies like Japan, the Netherlands, and South Korea will be excluded from the rule, minimising its impact, according to sources who requested anonymity.

The proposed rule, an expansion of the existing Foreign Direct Product rule, would prevent several Chinese fabs involved in advanced chip manufacturing from importing goods from multiple countries.

The companies most likely to be impacted by the rule include those in Israel, Taiwan, Singapore, and Malaysia. Specific Chinese chip factories targeted by the restrictions haven’t been publicly identified yet.

Chinese Foreign Ministry spokesperson Lin Jian criticised the US for trying to pressure other countries to limit China’s semiconductor industry, which he believes harms global trade and all parties involved.

“Containment and suppression cannot stop China’s development, but will only enhance China’s determination and ability to develop its scientific and technological self-reliance,” he said.

The Foreign Direct Product rule allows the US to restrict the sale of products, even those made in foreign countries, if they incorporate American technology.

This rule was previously used to restrict the sale of chips made abroad to Chinese tech giant Huawei.

The US also plans to expand its restricted trade list by including roughly 120 Chinese entities, encompassing chip fabs, toolmakers, electronic design automation software providers, and related companies.

Attribution: Reuters