US wants to harass Chinese chip industry with sweeping new export rules

Oct. 7 (Reuters) – The Biden administration on Friday released a sweeping series of export controls, including a measure to cut off China from certain semiconductor chips made around the world with U.S. tools, vastly increasing its reach in its bid to technological and military progress.

The rules, some of which will take effect immediately, build on restrictions outlined in letters to top toolmakers KLA Corp (KLAC.O), Lam Research Corp (LRCX.O) and Applied Materials Inc (AMAT.O) earlier this year. sent. forcing them to stop shipping equipment to fully Chinese-owned factories producing advanced logic chips.

The series of measures could represent the biggest shift in US policy on shipping technology to China since the 1990s. If effective, they could set the Chinese chip manufacturing industry back years by forcing US and foreign companies using US technology to cut support for some of China’s leading factories and chip designers.

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In a briefing with reporters on Thursday who gave a taste of the rules, senior government officials said many of the rules were designed to prevent foreign companies from selling advanced chips to China or providing Chinese companies with tools to make their own advanced chips. However, they admitted that they have not yet made any promises that allied countries will take similar measures and that talks with those countries are underway.

“We recognize that the unilateral controls we are introducing will lose their effectiveness over time if other countries do not join us,” said an official. “And we risk damaging US technology leadership if foreign competitors are not subjected to similar controls.”

The extension of US powers to control exports to China of chips made with US tools is based on a broadening of the so-called ‘foreign direct product rule’. It was previously expanded to give the US government the power to control the export of chips made abroad to Chinese telecom giant Huawei Technologies Co Ltd (HWT.UL) and later to stop the flow of semiconductors to Russia after the invasion of Ukraine.

On Friday, the Biden administration applied the extended restrictions on Chinese companies IFLYTEK, Dahua Technology and Megvii Technology, companies that were added to the entity list in 2019 over allegations that they helped Beijing crack down on the Uyghur minority group.

Senator Democratic Leader Chuck Schumer welcomed the announcement, arguing that the rules would “protect our country’s innovations from China’s predatory actions.”

The Semiconductor Industry Association, which represents chipmakers, said it is studying the regulations and urged the United States to “implement the rules in a targeted manner — and in conjunction with international partners — to level the playing field.”

Earlier on Friday, the United States added China’s top memory chip maker YMTC and 30 other Chinese entities to a list of companies US officials cannot inspect, raising tensions with Beijing and targeting a company that has long harassed the Biden administration. . read more

The “unverified list” is a potential stepping stone to stricter economic blacklisting, but companies that comply with US inspection rules could be removed from the list. On Friday, US officials removed nine such companies, including China’s Wuxi Biologics, which makes ingredients for AstraZeneca’s (AZN.L) COVID-19 vaccine.

The new regulations will also severely restrict exports of U.S. equipment to Chinese memory chip manufacturers and formalize letters to Nvidia Corp (NVDA.O) and Advanced Micro Devices Inc (AMD) restricting shipment to China of chips used in supercomputing systems that countries around the world that the world relies on to develop nuclear weapons and other military technologies.

Reuters was the first to report important details about the new restrictions on memory chip manufacturers, including postponements for foreign companies operating in China and steps to lift the restrictions on shipments to China of technologies from KLA, Lam, Applied Materials, Nvidia and AMD. expand. read more read more

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Reporting by Stephen Nellis and Karen Freifeld; additional reporting by David Sheparson; Editing by Alexandra Alper; Chris Sanders, Christopher Cushing and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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