The US is preparing to introduce sweeping export controls in an effort to slow Chinese efforts to obtain semiconductors and chipmaking equipment for supercomputers and other military-related applications.
According to several people familiar with the situation, the US commerce department is poised to announce restrictions that would essentially bar American companies from selling cutting-edge technology to Chinese groups, and would severely limit non-US companies from selling products that use the technology to customers in China.
The controls are the latest effort to prevent China from using US technology to develop military programs, from quantum computing to hypersonic weapons. The US is trying to prevent Chinese companies from providing technology to the People’s Liberation Army through Beijing’s “civil-military fusion” plan.
The restrictions are being tailored to make it harder for Chinese chip manufacturers — including Semiconductor Manufacturing International Corp, Yangtze Memory Technologies Co, and ChangXin Memory Technologies — to close the big technological gap with rivals in the US, Europe and elsewhere in Asia.
The Financial Times reported this year that YMTC appeared to be supplying Huawei, the telecoms equipment company, with chips, in violation of US export controls.
“The US government wants granular control over any US technology used for semiconductor manufacturing. It wants to be able to veto the use by, or exports to, specific companies in China across the board,” said Paul Triolo, a technology expert at Albright Stonebridge Group.
The US will introduce two rules, according to one person familiar with the situation. The first is designed to stop China securing advanced chips for supercomputers and artificial intelligence applications.
China launched its first exascale supercomputer last year, pulling ahead of the US. Most of the processors powering such supercomputers are designed by companies such as Tianjin Phytium Information Technology, but they cannot yet be manufactured in China. The US blacklisted Phytium last year after it emerged that some of its chips were produced by Taiwan Semiconductor Manufacturing Co.
Two of the people familiar with the plan said the US would set a threshold of 14 nanometers, which would prevent companies exporting leading-edge chip technology to China. The first rule will also restrict the export of semiconductor-making equipment.
The administration will use the Foreign Direct Product Rule, a mechanism that was first invoked against Huawei. It bars companies from selling products that use US technology without obtaining an export license — which is usually hard to secure — from the commerce department.
Washington will also implement a second rule that puts foreign countries on notice of being added to an export blacklist — known as the “entity list” — if they do not co-operate with efforts to make sure they are engaging in “secure trade” and not involved in violating other export controls.
Eric Sayers, managing partner at security consultancy Beacon Global Strategies, said the overall package was a “bold” move. “It will buy the Biden team some goodwill with China hawks on Capitol Hill who have been frustrated with the slow movement of export control policy,” he said.
One semiconductor industry executive said questions remained about “how big a shot” the Biden administration wanted to take, adding that the details outlined in the rules would be critical. “There’s a lot of different ways in which the borders [of technology] can be defined,” he said.
In an interview with the FT, Sanjay Mehrotra, chief executive of US memory chipmaker Micron, declined to say if the rules would affect sales in China.
“China is an important market for the entire semiconductor industry. It’s a large market and our sales there are in line with the rest of the semiconductor industry,” Mehrotra said.
The commerce department declined to comment.
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