Latest US strike on Chinese chips hits semiconductor device makers By Reuters
By Karen Freifeld and David Shepardson
(Reuters) – The U.S. will launch on Monday its third crackdown in three years on China’s semiconductor industry, curbing exports to 140 companies including chip maker Naura Technology Group, among other measures, two people familiar with the matter said.
The effort to meet Beijing’s chip-making ambitions will also hit Chinese equipment makers Piotech and SiCarrier Technology with new export restrictions as part of the package, which targets shipments of advanced memory chips and more chip-making equipment to China.
The move is one of the last major efforts by the Biden administration to limit China’s ability to access and produce chips that could help improve intelligence for military applications, or threaten US national security.
It comes just weeks before the inauguration of former Republican president Donald Trump, who is expected to retain many of Biden’s tough policies on China.
The package includes curbs on China-bound exports of high bandwidth memory (HBM) chips, which are important for high-end applications such as AI training; new curbs on 24 additional tools and three software tools; and new export restrictions on shipbuilding machinery made in countries such as Singapore and Malaysia.
Instrument controls will likely hurt Lam Research (NASDAQ 🙂 ), KLA and Applied Materials (NASDAQ 🙂 ), as well as non-US companies such as Dutch machine maker ASM International ( AS: ).
Among the Chinese companies facing the new restrictions are about a dozen semiconductor companies, two investment companies and more than 100 toolmakers, the sources said. US lawmakers say some of the companies, including Swaysure Technology Co, Qingdao SiEn, and Shenzhen Pensun Technology Co, are working with China’s Huawei Technologies, a telecommunications equipment leader that was hit by US sanctions and is now at the center of chip production and development in China.
They will be added to the business directory, which prevents US suppliers from shipping to them without obtaining a special license.
When asked about the American restrictions, the spokesperson of the Chinese foreign ministry, Lin Jian, said that this behavior undermines the international economic exchange system and disrupts the supply of goods around the world.
China will take measures to protect the rights and interests of its companies, he added at a regular press conference on Monday.
China’s commerce ministry did not immediately respond to a request for comment. China has increased its push for independence in the semiconductor sector in recent years, as the US and other countries have imposed restrictions on exports of advanced chips and manufacturing equipment. However, it is still years behind chip industry leaders such as Nvidia (NASDAQ: ) in AI chips and chip maker ASML (AS: ) in the Netherlands.
The US is also poised to impose more restrictions on Semiconductor Manufacturing International, China’s largest contract chip maker, which was listed on the Enterprise List in 2020 but with a policy that allowed billions of dollars in export licenses to be granted.
For the first time, the US will add two companies investing in chips to the business list. A private Chinese company Smart (LON:) Road Capital and technology firm Wingtech Technology Co will be added.
Companies seeking export licenses from listed companies are often denied.
DUTCH AND JAPANESE FORGIVE
Part of the new package dealing with foreign direct product legislation could hurt some American allies by limiting what their companies can export to China.
This new law will expand the US’s power to stop the export of equipment made by US, Japanese, and Dutch manufacturers in other parts of the world to certain chip plants in China.
Devices made in Israel, Malaysia, Singapore, South Korea and Taiwan are subject to the law while Japan and the Netherlands will be exempt. The expanded direct foreign product rule will apply to 16 listed companies that are considered most important to China’s advanced chip-making ambitions.
The legislation would also reduce to zero the amount of US content that determines whether certain foreign materials are under US jurisdiction. That would allow the US to control anything shipped to China from overseas if it contains US chips.
The new rules are being released after lengthy negotiations with Japan and the Netherlands, which, along with the United States, govern the production of advanced chipmaking equipment. The United States plans to exempt countries that use similar controls, the people said.
Another rule in the package limits the memory used in AI chips compatible with what is known as “HBM 2” and above, a technology developed by South Korea’s Samsung and SK Hynix and US-based Micron (NASDAQ:).
Industry sources expect only Samsung Electronics (KS:) to be affected. Analysts estimate that Samsung generates about 30% of its HBM chip sales from China. The latest rules are the third major package of chip-related export restrictions on China adopted under the Biden administration.
In October 2022, the United States published a set of controls on the sale and manufacture of certain high-end chips that were considered a major shift in its technology policy toward China since the 1990s.
