US aims to hobble China’s chip industry with sweeping new rules | Trade War News

The Biden administration on Friday released a sweeping set of export controls, including a measure to cut China off from certain semiconductor chips made around the world with US tools, greatly expanding its reach to include Beijing’s technological and military advances slow it down.

The series of measures could mark the biggest shift in US policy toward shipping technology to China since the 1990s. If effective, they could set China’s chipmaking industry back years by forcing US and foreign companies using US technology to stop supporting some of China’s leading fabricators and chip designers.

“This will set the Chinese back by years,” said Jim Lewis, a technology and cybersecurity expert at the Center for Strategic and International Studies (CSIS), a Washington DC-based think tank, who said the guidelines hark back to the strict regulations from the height of the Cold War.

“China isn’t going to give up chip making… but it’s really going to slow it down [down].”

The rules, some of which take effect immediately, build on restrictions sent in letters earlier this year to leading toolmakers KLA Corp, Lam Research Corp and Applied Materials Inc, effectively requiring them to stop shipments of equipment to fully in Chinese-owned factories that manufacture advanced products discontinue logic chips.

Also Read :  12 featured remote jobs for architects and designers | News

In a briefing with reporters Thursday unveiling the rules, senior government officials said many of the measures aimed to prevent foreign firms from selling advanced chips to China or to provide Chinese firms with tools to make their own advanced chips supply. However, they acknowledged that they have not yet received any commitments that allied nations will implement similar measures and that talks with those nations will continue.

“We recognize that the unilateral controls we put in place will lose effectiveness over time if other countries don’t join us,” an official said. “And we risk damaging U.S. technology leadership unless foreign competitors are subject to similar controls.”

Potential impact ‘pretty stunning’

The expansion of US powers to control the export of chips made with US tools to China is based on an extension of the so-called Foreign Direct Product Rule. It was previously expanded to give the US government powers to control the export of foreign-made chips to Chinese telecom giant Huawei Technologies Co Ltd and later to halt the flow of semiconductors to Russia following its invasion of Ukraine.

On Friday, the Biden administration applied the expanded restrictions to China’s IFLYTEK, Dahua Technology and Megvii Technology, companies that were added to the corporate list in 2019 over allegations that they helped Beijing suppress its Uyghur minority group.

Also Read :  Kansas recovers 80% of jobs lost to COVID-19, jobless figure ticks up to 2.5%
Semiconductor chips on a circuit board.
The rules may hit the data centers of some Chinese tech giants [File: Florence Lo/Illustration/Reuters]

The rules, released on Friday, also block the shipping of a wide range of chips for use in Chinese supercomputing systems. The rules define a supercomputer as any system with more than 100 petaflops of processing power in a 6,400 square foot (595 square meter) footprint, a definition that two industry sources said could also apply to some commercial data centers owned by Chinese tech giants.

US Senate Democratic Chairman Chuck Schumer welcomed the announcement, arguing that the rules would “protect our country’s innovations from China’s predatory actions.”

Eric Sayers, a defense policy expert at the American Enterprise Institute, said the move reflects a new attempt by the Biden administration to curb China’s advances rather than simply trying to level the playing field.

“The scope of the rule and the possible implications are quite impressive, but of course the devil will be in the implementation details,” he added.

The Semiconductor Industry Association, which represents chipmakers, said it is studying the regulations and urged the US to “implement the rules in a targeted manner – and in collaboration with international partners – to create a level playing field.”

Also Read :  Fed's Collins says inflation fight to cost jobs, recession not inevitable

relieve tension

Earlier Friday, the US added China’s top memory chipmaker YMTC and 30 other Chinese companies to a list of companies US officials cannot inspect, fueling tensions with Beijing and targeting a company that has long worried the Biden administration .

The “unconfirmed list” is a potential precursor to stricter economic blacklists, but companies that comply with US inspection rules can be delisted. On Friday, US officials removed nine such firms, including a unit of China’s Wuxi Biologics that makes ingredients for AstraZeneca Plc’s COVID-19 vaccine.

The new rules will also severely limit the export of US devices to Chinese memory chip makers and formalize letters to Nvidia Corp and Advanced Micro Devices Inc (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 release key details of the new restrictions on memory chipmakers, including a respite for foreign companies operating in China and measures to expand restrictions on technology shipments from KLA, Lam, Applied Materials, and Nvidia AMD to China.

Leave a Reply

Your email address will not be published.