The U.S. will implement its third major crackdown on China’s semiconductor sector starting Monday, imposing fresh export restrictions on 140 companies, including Naura Technology Group, a prominent chip equipment maker. This latest move is part of a broader effort to weaken China’s semiconductor capabilities, focusing on Chinese chip toolmakers such as Piotech and SiCarrier Technology, alongside tighter controls on advanced memory chips and chipmaking equipment.
The restrictions are one of the Biden administration’s final major efforts to limit China’s access to critical technologies, particularly those that could enhance Beijing’s development of artificial intelligence (AI) for military or national security purposes. These measures come just weeks before Donald Trump’s inauguration, with expectations that his administration will continue many of the tough policies enacted under Biden’s presidency.
This new package includes restrictions on high-bandwidth memory (HBM) chips, vital for AI applications like machine learning, and extends controls to 24 additional chipmaking tools and three software tools. Export limits will also be placed on chipmaking equipment from countries such as Singapore and Malaysia, potentially impacting major U.S. companies like Lam Research, KLA, and Applied Materials, as well as foreign companies like Dutch equipment supplier ASM International.
Among the companies facing these new restrictions are nearly two dozen Chinese semiconductor firms, two investment companies, and more than 100 chip tool manufacturers. Some of these entities, including Swaysure Technology, Qingdao SiEn, and Shenzhen Pensun Technology, are linked to China’s telecom giant Huawei, a key player in China’s semiconductor ambitions. These companies will be added to the U.S. Entity List, which prohibits U.S. companies from supplying them without a special license.
Despite China’s efforts to build self-sufficiency in semiconductor production, including a focus on advanced chip production, it remains far behind industry leaders like Nvidia in AI chips and ASML in chipmaking equipment.
In addition to these restrictions, the U.S. is set to impose more stringent controls on Semiconductor Manufacturing International (SMIC), China’s largest contract chip manufacturer, which has been on the Entity List since 2020 but has received significant license approvals. For the first time, the U.S. will also add two investment firms—Wise Road Capital and Wingtech Technology Co.—to the Entity List, which will further restrict their access to critical U.S. technology.
One significant aspect of the new measures includes the expansion of the “foreign direct product rule,” which will limit the export of chipmaking equipment by U.S., Japanese, and Dutch manufacturers to certain Chinese facilities. While countries like Singapore, Malaysia, Israel, Taiwan, and South Korea will be impacted by this rule, the Netherlands and Japan have been exempted after lengthy negotiations with the U.S.
The updated foreign direct product rule will also tighten the criteria for when foreign items, containing even a small amount of U.S. content, are subject to export controls. This will give the U.S. greater control over global chip supply chains, ensuring that critical technologies don’t reach Chinese manufacturers.
The new rules are set to take effect after extensive discussions with Japan and the Netherlands, both of which, along with the U.S., dominate the production of advanced chipmaking equipment. The U.S. has indicated it will exempt nations that implement similar export controls.
Lastly, a new restriction on HBM 2 chips, essential for AI applications, will primarily affect Samsung Electronics, with U.S.-based Micron and South Korea’s SK Hynix also involved in the sector. These moves mark the third significant package of export restrictions on China’s semiconductor industry since the Biden administration began its campaign in October 2022 to curb China’s access to advanced chips.
As tensions between the U.S. and China continue to rise, these measures represent a concerted effort to maintain technological supremacy and safeguard U.S. national security interests.
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