The Biden administration is imposing additional restrictions on sales of semiconductor equipment and AI memory chips to China that would increase the U.S. crackdown on Beijing’s tech ambitions but would fall short of some of the tougher measures previously considered, according to people familiar with the matter.
The restrictions could be announced as soon as next week, residents said, as the timing and contours of the rules have changed several times and nothing is final until they are published. The measures followed months of deliberation by US officials, negotiations with allies Japan and the Netherlands and intense lobbying by American chip-equipment makers who warned that tougher measures would cause catastrophic damage to their business.
The citizens said that the latest proposal has the main differences from the previous drafts. First, the US would add Chinese companies to a list of trade restrictions. The U.S. had previously considered sanctioning six suppliers to Huawei Technologies Co. — the telecommunications giant at the center of China’s technology industry — and officials are aware of at least half a dozen more, the people said. But now Huawei plans to add only some of these suppliers to the list of entities remarkable A loophole for ChangXin Memory Technologies Inc., which is trying to develop AI memory chip technology.
Spokesmen for the Commerce Department’s Bureau of Industry and Security declined to comment. A spokesman for the National Security Council referred Bloomberg News to the BIS.
Japanese chip stocks rose. Tokyo Electron Ltd. rose 10%, paring losses in early trade. Kokusai Electric Corp. rose 23%, while Screen Holdings Co also gained about 10%.
The rules now being considered would also penalize two chip factories owned by Semiconductor Manufacturing International Corp., Huawei’s chipmaking partner, the people said. The 100 additional entity lists would focus on Chinese companies that make semiconductor manufacturing equipment, rather than the manufacturing facilities that make the chips themselves, the people said. Wired He previously reported that the US could come up with new export control rules as soon as next Monday.
That’s a partial win for American chip gear makers—Lam Research Corp., Applied Materials Inc. and KLA Corp., which have been opposing unilateral U.S. restrictions on Chinese companies for months, are among Huawei’s six suppliers. They claim the sanctions would put them at an unfair disadvantage compared to Tokyo Electron and Dutch equipment giant ASML Holding NV, whose governments have yet to agree to the toughest restrictions on sales to China. Japan and the Netherlands set some limits on China from 2022 to partially match US measures, but both countries have recently resisted American pressure for even tighter controls.
This summer, U.S. officials tried tough negotiating tactics with allies warning that the US may restrict it directly Chinese sales of foreign companies, Japan and the Netherlands saw the step as a draconian overreach. The U.S.’s hope was that the threat of using the so-called foreign direct products rule, or FDPR, would encourage allies to impose their own limits. But Tokyo and The Hague have shown little interest in joining the Biden administration before President-elect Donald Trump returns to power.
The new US rules, which also restrict some additional categories of instruments, would still be in place excluded allies including Japan and the Netherlands of the FDPR provisions, people familiar with the matter said. It is unclear whether Japan or the Netherlands will eventually impose additional restrictions on the Chinese companies the US wants to punish.
The latest version of the US controls would also include some provisions on high-bandwidth memory chips, which handle data storage and are essential for artificial intelligence. Samsung Electronics Co. and SK Hynix Inc. to Micron Technology Inc. Along with the American memory maker, they expect the new measures to have an impact, the people said.
