- China isn’t going to give up on chipmaking…but this will really slow them (down).
- “We recognize that the unilateral controls we’re putting into place will lose effectiveness over time if other countries don’t join us,” one official said.
- It was previously expanded to give the U.S. government authority to control exports of chips made overseas to Chinese telecoms giant Huawei Technologies Co Ltd and later to stop the flow of semiconductors to Russia after its invasion of Ukraine.
The Biden administration published a comprehensive set of export controls on Friday, greatly extending its reach in an effort to halt Beijing’s technological and military advancements. One such measure barred China from obtaining specific semiconductor chips produced anywhere in the world using American machinery as reported by MVariety.
The rules, some of which take immediate effect, build on restrictions sent in letters this year to top toolmakers KLA Corp, Lam Research Corp and Applied Materials Inc, effectively requiring them to halt shipments of equipment to wholly Chinese-owned factories producing advanced logic chips.
The raft of measures could amount to the biggest shift in U.S. policy toward shipping technology to China since the 1990s.
If effective, they could hobble China’s chip manufacturing industry by forcing American and foreign companies that use U.S. technology to cut off support for some of China’s leading factories and chip designers.
“China isn’t going to give up on chipmaking…but this will really slow them (down).”
They conceded, however, that they had not secured any promises that allied nations would implement similar measures and that discussions with those nations are ongoing.
Expansion of U.S. powers
“We recognize that the unilateral controls we’re putting into place will lose effectiveness over time if other countries don’t join us,” one official said.
The expansion of U.S. powers to control exports to China of chips made with U.S. tools is based on a broadening of the so-called foreign direct product rule.
The rules published on Friday also block shipments of a broad array of chips for use in Chinese supercomputing systems.
Eric Sayers, a defense policy expert at the American Enterprise Institute, said the move reflects a new bid by the Biden administration to contain China’s advances instead of simply seeking to level the playing field.
“The scope of the rule and potential impacts are quite stunning but the devil will of course be in the details of implementation,” he added.
Much tougher penalties
Companies around the world began to wrestle with the latest U.S. action, with shares of semiconductor manufacturing equipment makers falling.
The Semiconductor Industry Association, which represents chipmakers, said it was studying the regulations and urged the United States to “implement the rules in a targeted way — and in collaboration with international partners — to help level the playing field.”
Earlier on Friday, the United States added China’s top memory chipmaker YMTC and 30 other Chinese entities to a list of companies that U.S. officials cannot inspect, ratcheting up tensions with Beijing and starting a 60 day-clock that could trigger much tougher penalties.
Companies are added to the unverified list when U.S. authorities cannot complete on-site visits to determine if they can be trusted to receive sensitive U.S. technology, forcing U.S. suppliers to take greater care when shipping to them.
Under a new policy announced on Friday, if a government prevents U.S. officials from conducting site checks at companies placed on the unverified list, U.S. authorities will start the process of adding them to the entity list after 60 days.
The new regulations will also severely restrict the export of U.S. equipment to Chinese memory chip makers and formalize letters sent to Nvidia Corp and Advanced Micro Devices Inc or AMD restricting shipments to China of chips used in supercomputing systems that nations around the world rely on to develop nuclear weapons and other military technologies.
Reuters was the first to report key details of the new curbs on memory chip makers, including a reprieve for foreign companies operating in China and the moves to broaden restrictions on shipments to China of technologies from KLA, Lam, Applied Materials, Nvidia and AMD.
South Korea’s industry ministry said in a statement on Saturday there would be no significant disruption to equipment supply for Samsung and SK Hynix’s existing chip production in China.
However, it was necessary to minimize uncertainty through consultation with U.S. export control authorities, it added.
On Saturday, China’s foreign ministry spokesperson Mao Ning called the move an abuse of trade measures designed to reinforce the United States’ “technological hegemony.”
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