How Biden is blocking China’s access to chip technology

The Biden administration on Friday released a sweeping set of export controls, including a measure to cut off China from certain semiconductor chips made anywhere in the world with US equipment, vastly expanding their scope as it seeks to curb China’s technological and military advances. Beijing.

The rules, some of which will take effect immediately, build on restrictions sent in letters this year to major toolmakers KLA Corp, Lam Research Corp and Applied Materials Inc, effectively requiring them to stop shipments of equipment to manufacturing factories. wholly Chinese owned that produce advanced logic chips. .

The series of measures could represent the biggest shift in US policy toward shipping technology to China since the 1990s. If effective, they could hamper China’s chipmaking industry by forcing US companies and foreign companies using US technology to cut off support for some of China’s leading chip factories and designers.

“This will set the Chinese back 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 policies date back to the strict regulations at the height of the Cold War.

“China is not going to give up chip making… but this will really slow them down.”

In a briefing with reporters Thursday previewing the rules, senior government officials said many of the measures were aimed at preventing foreign companies from selling advanced chips to China or supplying Chinese companies. tools to make your own advanced chips. However, they admitted that they had not obtained any promises that allied nations would implement similar measures and that talks with those nations are ongoing.

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

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The expansion of US powers to control exports to China of chips made with US tools is based on an expansion of the so-called foreign direct products rule. It was previously expanded to give the US government authority to control exports of foreign-made chips to Chinese telecoms giant Huawei Technologies Co Ltd and later to stop the flow of semiconductors to Russia after its invasion of Ukraine.

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

The rules published on Friday also block shipments 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 computing power within a footprint of 6,400 square feet, a definition that two industry sources say could also affect some commercial data centers of Chinese tech giants. .

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

“The scope of the rule and the potential impacts are quite startling, but the devil will of course be in the implementation details,” he added.

Companies around the world began to struggle with the latest US action, with shares in 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 specifically, and in collaboration with international partners, to help level the playing field.” play”.

Earlier on Friday, the United States added China’s top memory chip maker YMTC and 30 other Chinese entities to a list of companies that US officials are barred from inspecting, ratcheting up tensions with Beijing and starting a 60-day clock. which could trigger much harsher penalties.

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Companies are added to the unverified list when US authorities are unable to complete on-site visits to determine if they can be trusted to receive sensitive US technology, forcing US suppliers. USA to be more careful when sending them.

Under a new policy announced Friday, if a government prevents US officials from conducting on-site verifications of unverified listed companies, US authorities will begin the process to add them to the list. of entities after 60 days.

YMTC’s inclusion on the entity list would heighten already-rising tensions with Beijing and force its US suppliers to seek hard-to-obtain licenses from the US government before shipping even the lowest-tech items to them.

The new regulations will also severely restrict the export of US equipment to Chinese memory chipmakers and formalize letters sent to Nvidia Corp and Advanced Micro Devices Inc (AMD) restricting shipments to China of chips used in supercomputing systems in the United States. 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 restrictions on memory chip makers, including a reprieve for foreign companies operating in China and moves to expand restrictions on shipments to China of technologies from KLA, Lam, Applied Materials, Nvidia and AMD.

South Korea’s Ministry of Industry said in a statement on Saturday that there would be no significant disruption in the supply of equipment for Samsung and SK Hynix’s existing chip production in China.

However, uncertainty had to be minimized through consultation with US export control authorities, it added.

On Saturday, Chinese Foreign Ministry spokesman Mao Ning called the move an abuse of trade measures designed to bolster America’s “technological hegemony.”

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