The Biden administration is considering additional restrictions on sales of semiconductor equipment and AI memory chips to China, which would escalate the US crackdown on Beijing’s technology ambitions, but stops short of some of the tougher measures previously considered, according to people. Informed about the matter.
The people, who confirmed that the timing and features of the rules have changed several times, said the restrictions could be revealed as soon as next week, and that nothing is final until they are published. The measures come after months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and intense lobbying by US chip equipment makers who warned that tougher measures would cause catastrophic damage to their businesses.
The latest proposal has key differences from previous drafts, the people said. The first is Chinese companies that the United States will add to the list of trade restrictions. The US previously considered imposing sanctions on six suppliers to Huawei Technologies Co – the telecommunications giant at the heart of China’s technology industry – and officials are aware of at least six more, the sources said. But they now plan to add only some Huawei suppliers to the entity list, with an addition Note Overlooking ChangXin Memory Technologies Inc., which is trying to develop AI memory chip technology.
Spokesmen for the Commerce Department’s Bureau of Industry and Security declined to comment. A National Security Council spokesman referred Bloomberg News to the Bank for International Settlements.
Japanese chip stocks jumped. Tokyo Electron Ltd. rose as much as 10%, paring losses in early trading. Kokusai Electric Corp rose 23%, and Screen Holdings Co rose about 10%.
The rules now under consideration would also penalize two chip manufacturers owned by Semiconductor Manufacturing International Corp, Huawei’s chipmaking partner, the people said. More than 100 additional entity listings will focus on Chinese companies that make semiconductor manufacturing equipment, rather than manufacturing facilities that make the chips themselves, the people said. Wired I reported earlier that the United States may come out with new export control rules next Monday.
This is a partial win for US chip equipment manufacturers – Lam Research Corp. and Applied Materials Inc. and KLA Corp – which has argued for months against unilateral US restrictions on key Chinese companies, including Huawei’s six suppliers. They have claimed that such sanctions would put them at an unfair disadvantage compared to foreign rivals Tokyo Electron and Dutch equipment giant ASML Holding NV, whose governments have yet to agree to the toughest restrictions on sales to China. Japan and the Netherlands have imposed some restrictions on China to partly match US measures from 2022, but both countries have resisted recent US pressure to impose tougher controls.
This summer, American officials tried a tough negotiating tactic with allies Warning that the United States could directly limit China’s sales to foreign companies, a move seen by Japan and the Netherlands as draconian overreach. The US hope was that the threat of using the so-called Foreign Direct Product Rule, or FDPR, would prompt the allies to impose their own restrictions. But Tokyo and The Hague have shown little interest in aligning with the Biden administration before President-elect Donald Trump returns to power.
The new US rules, which also restrict some categories of additional instruments, will remain so Exemption of the Allies including Japan and the Netherlands Of the FDPR provisions, people familiar with the matter said. It is unclear whether Japan or the Netherlands will eventually impose additional restrictions on Chinese companies that the United States now plans to impose sanctions on.
The latest version of the US regulations will also include some provisions related to high-bandwidth memory chips, which handle data storage and are essential for artificial intelligence. Samsung Electronics Co. and SK Hynix Inc. are expected to be affected, the people said. In addition to the American memory maker Micron Technology Inc., the new measures.