New restrictions in order as US targets Chinese semiconductor ambitions: report

The Biden administration is ramping up its efforts to curb China’s ability to produce advanced circuits, preparing export controls that will further affect the semiconductor sector.

According to a Wall Street Journal report, citing people familiar with the matter, the administration has imposed new restrictions on exports from the US of certain chips used in artificial intelligence computing and manufacturing equipment.

The report says that the manufacturing equipment will be used to create powerful chips that can perform a large number of calculations.

More new measures are also on the table. The administration is also targeting high-end memory chip manufacturing capabilities and advanced components used in some of the most advanced chip-making tools, the WSJ report said.

The administration is also targeting advanced quantum computing chips.

More Chinese tech companies will be added to the Commerce Department’s list of organizations.

The U.S. is also enlisting its allies to ensure China doesn’t get access to the tools it needs to bolster its semiconductor sector, the people cited above told the WSJ. Official announcements could be made as early as this week, they added.

The growth of China’s semiconductor industry could face a stumbling block as the US, South Korea and European countries could impose joint export restrictions as they have a near monopoly on the production and sale of the key hardware and software needed to build these ultra-advanced chips.

The Dutch government has made diplomatic efforts to limit China’s access to equipment, and has been urged to block the sale of equipment developed by major semiconductor company ASML Holding NV.

The U.S. has long targeted China’s semiconductor industry and tried to limit its development by including telecommunications giant Huawei Technologies Co. and its largest chipmaker Semiconductor Manufacturing International Corp (SMIC) to the Commerce Department’s export blacklist.

The Biden administration has kept a check on the growth of China’s semiconductor sector in the same way that his predecessor, Donald Trump, launched a trade war with China to stop the growth of their chip industry.

The US and several of its allies are concerned about national security issues if the semiconductor industry moves outside the US. Advanced chips are essential tools for the military as well as for today’s global economy, making it a pillar of geopolitical power, the Wall Street Journal reported.

The US is taking measures such as tax breaks, grants to build factories and funding for research to redirect the semiconductor industry based in Asian economies back to the US. U.S. President Joe Biden and the U.S. Congress approved a total of $77 billion in funding in August to bolster the effort.

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