Exclusive: Biden will hit China with larger cuts in US chip and tool exports

Semiconductor chips are seen on a computer printed circuit board in this illustrative photo taken on February 25, 2022. REUTERS / Florence Lo / Illustration / File Photo

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WASHINGTON, Sept. 11 (Reuters) – Biden administration plans next month to widen limits on U.S. shipments to China of semiconductors used for artificial intelligence and chip-making tools, several people familiar with said. with the question.

The Department of Commerce intends to publish new regulations based on the restrictions communicated in letters earlier this year to three US companies: KLA Corp (KLAC.O), Lam Research Corp (LRCX.O) and Applied Materials Inc (AMAT.O) ), the people said, speaking on condition of anonymity. The plan for the new rules was not previously reported.

The letters, which the companies have publicly acknowledged, banned them from exporting chip-making equipment to Chinese factories that produce advanced semiconductors with sub-14-nanometer processes unless the vendors obtain Department of Commerce licenses.

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The rules would also encode restrictions in Department of Commerce letters sent to Nvidia Corp (NVDA.O) and Advanced Micro Devices (AMD.O) last month, instructing them to stop shipments of several artificial intelligence computer chips to China unless that do not obtain licenses. Read more

Some of the sources said the regulations would likely include further action against China. The restrictions may also be changed and the rules published later than expected.

So-called “is informed” letters allow the Commerce Department to bypass lengthy rule writing processes to quickly enforce checks, but the letters only apply to companies that receive them.

Turning the letters into rules would broaden their reach and could subject other US companies producing similar technologies to restrictions. The regulations could potentially apply to companies looking to challenge Nvidia and AMD’s dominance in artificial intelligence chips.

Intel Corp (INTC.O) and startups like Cerebras Systems are targeting the same advanced computing markets. Intel said it is closely monitoring the situation, while Cerebras declined to comment.

A source said the rules could also impose licensing requirements on shipments to China of products that contain the targeted chips. Dell Technologies (DELL.N), Hewlett Packard Enterprise (HPE.N) and Super Micro Computer (SMCI.O) produce data center servers that contain Nvidia’s A100 chip.

Dell and HPE said they were monitoring the situation, while Super Micro Computer did not respond to a request for comment.

A senior trade official declined to comment on the upcoming action, but said, “As a general rule, we try to codify any restrictions contained in the informed letters with a regulatory change.”

A Commerce Department spokesman on Friday declined to comment on specific regulations, but reiterated that it is “taking a comprehensive approach to implement additional actions … to protect US national security and foreign policy interests,” including to prevent China to acquire US technology applicable to military modernization.

KLA, Applied Materials, and Nvidia declined to comment while Lam did not respond to requests for comment. AMD did not comment on the specific policy move, but reiterated that it does not expect a “material impact” from its new licensing requirement.


The planned action comes as President Joe Biden’s administration sought to thwart China’s progress by targeting technologies where the United States still holds dominance.

“The strategy is to suffocate China and they found that the chips are a bottleneck. They can’t make this stuff, they can’t make the production equipment,” said Jim Lewis, technology expert at the Center for Strategic and International Studies. “Will change.”

In an update on China-related measures last week, the Chamber of Commerce, a US business lobby group, warned members of upcoming restrictions on AI chips and chip-making tools.

“We are now hearing that members should expect a set of rules or perhaps a general rule before the midterm elections to codify the guide in recently published (Department of Commerce) ‘informed’ letters to chip equipment and design companies. chip, “the room said.

The group also said the agency plans to add additional Chinese supercomputing entities to a commercial blacklist.

Reuters was the first to report in July that the Biden administration was actively discussing banning exports of chip-making tools to Chinese factories that produce advanced semiconductors at the node of 14 nanometers and smaller. Read more

US officials contacted allies to pressure them to implement similar policies so that foreign companies would not be able to sell technology to China that American companies would be prevented from shipping, two of the sources said.

“Coordination with allies is key to maximizing effectiveness and minimizing unintended consequences,” said Clete Willems, a former Trump administration trade official. “This should favor broader regulations that others can replicate instead of one-off ‘informed’ letters.”

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Reportage by Karen Freifeld and Alexandra Alper; Additional Reports by Stephen Nellis and Jane Lanhee Lee; Editing by Chris Sanders and Cynthia Osterman

Our Standards: Thomson Reuters Trust Principles.


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