The Biden administration is considering further restrictions on sales of semiconductor equipment and AI memory chips to China that would toughen U.S. crackdowns on Beijing’s technology ambitions but would not put a stop to some tougher measures previously considered, people familiar with the matter say.
The restrictions could be announced as early as next week, the people said, stressing that the timing and contours of the rules have changed several times and that nothing is final until they are published. The measures are the result of months of deliberations by U.S. officials, negotiations with allies in Japan and the Netherlands, and intense lobbying by American chip equipment makers who have 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 which Chinese companies the US would put on a trade restrictions list. The U.S. had previously considered imposing sanctions on six suppliers to Huawei Technologies Co. – the telecommunications giant at the center of China’s tech industry – and officials were aware of at least half a dozen more, the people said. However, now they plan to add only some of these Huawei suppliers to the company list remarkable Cease and desist from ChangXin Memory Technologies Inc., which is attempting to develop AI memory chip technology.
Spokespeople for the Commerce Department’s Bureau of Industry and Security declined to comment. A National Security Council spokesman referred Bloomberg News to the BIS.
Japanese chip stocks surged. Tokyo Electron Ltd. rose as much as 10%, erasing losses in early trading. Kokusai Electric Corp. rose 23%, and Screen Holdings Co. also rose about 10%.
The rules currently under consideration would also impose sanctions on two chip factories owned by Semiconductor Manufacturing International Corp., Huawei’s chipmaking partner, the people said. More than 100 additional listings would focus on Chinese companies that make equipment for semiconductor manufacturing, rather than factories that make the chips themselves. Wired As previously reported, the US could release new export control rules as early as next Monday.
That’s a partial victory for American chip device makers — Lam Research Corp., Applied Materials Inc. and KLA Corp. – who have been speaking out for months against unilateral US restrictions on important Chinese companies, including the six Huawei 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 not yet agreed to the toughest restrictions on sales to China. Japan and the Netherlands have imposed some restrictions on China to partially comply with U.S. measures starting in 2022, but both countries have resisted recent American pressure for even stricter controls.
American officials tried tough negotiating tactics with allies this summer Warning that the US could curb directly China sales by foreign companies, a move that Japan and the Netherlands viewed as a draconian overreach. The U.S. hope was that the threat of applying the so-called Foreign Direct Product Rule (FDPR) would prompt allies to impose their own restrictions. But Tokyo and The Hague have shown little interest in allying with the Biden administration ahead of President-elect Donald Trump’s return to power.
The new US rules, which also restrict some additional tool categories, would continue to do so excluded allies, including Japan and the Netherlands from FDPR regulations, people familiar with the matter said. It is unclear whether Japan or the Netherlands will ultimately impose additional restrictions on the Chinese companies that the US now wants to sanction.
The latest version of the U.S. controls would also include some provisions on high-bandwidth memory chips, which handle data storage and are essential to artificial intelligence. Samsung Electronics Co. and SK Hynix Inc., as well as American memory maker Micron Technology Inc., are likely to be affected by the new measures, the people said.