US escalates chip export curbs on China targeting 140 entities
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The news: The Biden administration unveiled its third sweeping crackdown on China’s semiconductor industry in as many years, imposing export restrictions on 140 Chinese entities to curb the country's progress in AI and military technologies.
The numbers: The measures go into effect on 31 December and include export bans on high-bandwidth memory chips (HBM2 or higher), 24 chipmaking tools and three software tools used to develop chips.
The context: The rules target 16 key companies seen as critical to China's chipmaking ambitions, including Semiconductor Manufacturing International, some Huawei affiliates, investment firms Wise Road Capital and Wingtech.
But the prolonged negotiations to secure ally cooperation, spanning over a year, gave China the opportunity to build up its equipment reserves, The New York Times noted, citing critics.
The resulting regulations incorporate exceptions that reflect industry lobbying from prominent chipmakers, including US-based Lam Research, Applied Materials and KLA, along with international rivals like Tokyo Electron and ASML, who advocated for rules that maintained some of their access to the profitable Chinese market.
US toolmakers and global rivals like Dutch equipment maker ASM International will still face export challenges due to expanded restrictions under the foreign direct product rule (FDPR).
The FDPR curbs exports to China of goods made overseas – for example in countries like Singapore, South Korea, Taiwan, Malaysia and Israel – that use even small amounts of US technology.
Japan and the Netherlands are exempt from the FDPR after extensive negotiations.
Reuters noted Samsung would be particularly affected, with analysts estimating the South Korean company generates about 30% of its HBM chip sales from China.
What they said: Commerce Secretary Gina Raimondo said the rules were “the strongest controls ever enacted by the US to degrade the People’s Republic of China’s ability to make the most advanced chips that they’re using in their military modernisation.”
The sources: The New York Times, The Financial Times, Bloomberg, Reuters
