US to tighten restrictions on exports of semiconductors to China

Wed 14 Sept 2022
Posted by: William Barns-Graham
Trade News

semiconductor

The US is to broaden curbs on shipments of semiconductors and equipment for manufacturing the materials to China in new regulations that will soon be published by the Commerce Department.

US firms will need to apply for licences to export chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14-nanometer processes.

Reuters reports that three companies – KLA Corp, Lam Research Corp and Applied Materials Inc – have already been notified of the rule changes.

Impact

The new rules will also codify guidance given to Nvidia Corp and Advanced Micro Devices last month, when they were instructed to halt shipments of several artificial intelligence computing chips to China unless they obtained licences.

Nvidia shares sank to a 52-week low on reports of the new curbs, according to MarketWatch.

Reuters said other restrictions may be added.

Growing tension

Tensions have been rising between Washington and Beijing following House Speaker Nancy Pelosi’s visit to Taiwan last month.

The US has since begun restricting the export of high-end graphics computer chips to Russia, China and Hong Kong.

A Commerce Department spokesperson told Bloomberg that the agency’s current goals include preventing China’s acquisition of US technology to aid its military modernisation efforts, conduct human rights abuses and enable other malign activities.

Precious commodity

Semiconductor chips have become a critical product in many industries as they are used in a range of consumer products such as smartphones and computers, as well as in cars.

Taiwan plays an outsized role in the global semiconductor supply chain, according to Fortune.

Compete

Over the summer, the US passed the Chips and Science Act in a bid to increase the country’s competitiveness in the semiconductor industry. The legislation provides $50 billion in funding for the industry, reports The Hill.

The US was once responsible for producing 37% of global semiconductor chips, but this proportion is now just 12%.