Oct 10 (Reuters) – The Biden administration on Friday unveiled a broad set of export controls, including a measure to cut off China from certain semiconductor chips made anywhere in the world with U.S. equipment, vastly expanding its reach in its attempt to slow down Beijing’s technological development. and military advances.
The rules, some of which take effect immediately, are based on restrictions sent this year in letters to major toolmakers KLA Corp ( KLAC.O ), Lam Research Corp ( LRCX.O ) and Applied Materials Inc ( AMAT.O , effectively demanding them. to stop shipments of equipment to all-Chinese factories that produce advanced logic chips.
The series of measures could represent the biggest shift in U.S. policy toward sending technology to China since the 1990s. If effective, they could hamper China’s chipmaking industry by forcing U.S. and foreign companies that use technology US to cut support for some of China’s top chip makers 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 harsh regulations of the heyday. of the Cold War.
“China is not going to give up on chip manufacturing … but this will really slow them down.”
In a briefing with reporters on Thursday that previewed the rules, senior government officials said many of the measures were aimed at preventing foreign companies from selling advanced chips to China or providing Chinese companies with tools to make their own advanced chips. They conceded, however, that they had not secured any promises that allied nations would implement similar measures and that discussions with those nations are ongoing.
“We recognize that the unilateral controls we are putting in place will lose effectiveness over time if other countries do not join us,” one official said. “And we risk undermining American technological leadership if foreign competitors are not subject to similar controls.”
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 product rule. It was previously extended to give the U.S. government authority to control exports of overseas-made chips to Chinese telecom giant Huawei Technologies Co Ltd ( HWT.UL ) and later to stop the flow of semiconductors to Russia after its invasion from Ukraine
On Friday, the Biden administration applied the expanded restrictions to Chinese companies IFLYTEK, Dahua Technology and Megvii Technology, companies that were added to the entity list in 2019 over allegations that they helped Beijing suppress its Uyghur minority group.
The rules released 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 in a 6,400-square-foot space, a definition that two industry sources said 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 seeking to level the playing field.
“The scope of the rule and the potential impacts are quite staggering, but the devil will, of course, be in the details of implementation,” he added.
Businesses around the world began to struggle with the latest US action, with shares of 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 in a targeted way — and in collaboration with international partners — to help level the playing field.” “.
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 cannot inspect, raising tensions with Beijing and starting a 60-day clock that could lead to much harsher penalties. Read more
Companies are added to the non-verified list when U.S. authorities cannot complete on-site visits to determine whether they can be trusted to receive sensitive technology from the United States, forcing U.S. suppliers to be more careful when shipping to them.
Under a new policy announced Friday, if a government prevents U.S. officials from conducting site checks on companies on the unverified list, U.S. authorities will begin the process to add them to the list of entities after 60 days.
Listing the YMTC would heighten already-escalating tensions with Beijing and force its US suppliers to seek hard-to-get licenses from the US government before shipping even low-tech items to them.
The new regulations will also severely restrict the export of U.S. equipment to Chinese memory chip makers and formalize letters sent to Nvidia Corp ( NVDA.O ) and Advanced Micro Devices Inc ( AMD ) ( AMD.O ) restricting shipments to China of chips used in supercomputing. systems 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 technology from KLA, Lam, Applied Materials , Nvidia and AMD.
South Korea’s industry ministry said in a statement on Saturday that there will be no significant disruptions in the supply of existing chip production equipment from Samsung ( 005930.KS ) and SK Hynix ( 000660.KS ) in China.
However, it was necessary to minimize uncertainty through consultation with US export control authorities, he added.
China’s commerce ministry said in a statement on Monday that it firmly opposes the US move as it harms normal trade and economic exchange between companies in the two countries and threatens the stability of global supply chains.
“The United States should stop wrongdoing immediately and treat companies around the world, including Chinese companies, fairly.”
On Saturday, Chinese Foreign Ministry spokesman Mao Ning called the move an abuse of trade measures aimed at strengthening US “technological hegemony.” Read more
Reporting by Stephen Nellis in San Francisco and Karen Freifeld in New York Additional reporting by David Shepardson in Washington, Joyce Lee in Seoul and Yew Lun Tian in Beijing Editing by Ana Nicolaci da Costa and Clarence Fernandez
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