Biden administration tightens restrictions on China’s access to chip technology

On Friday, the Biden administration announced new restrictions on the sale of semiconductor technology to China, a move aimed at crippling Beijing’s access to critical technologies needed for everything from supercomputing to weapons guidance.

These moves are the clearest sign yet that a dangerous confrontation between the world’s two superpowers is increasingly taking place in the technological realm, as the United States attempts to establish its grip on the advanced computing and semiconductor technology deemed essential to China’s military and economic ambitions.

The package of restrictions, issued by the Commerce Department, is designed largely to slow the progress of China’s military programs, which use supercomputing to model nuclear explosions, guide hypersonic weapons, and create advanced weapons. Monitor networks of opponents and minoritiesamong other activities.

Alan Estevez, the Commerce Department’s undersecretary for industry and security, said his office is working to prevent sensitive technologies with military applications from being acquired by China’s military, intelligence and security.

He said, referring to the People’s Republic of China.

Tech experts said the rules appear to impose the broadest export controls issued in a decade, similar to the Trump administration’s campaign against telecom giant Huawei, but broader, as they affect dozens of Chinese companies. In contrast to the Trump administration’s approach – which was seen as aggressive but scattered – the rules appear to establish a more comprehensive policy that would halt technology exports to a host of Chinese tech companies and cut off an emerging China’s ability to produce advanced chips on its own.

“It is an aggressive approach by the United States government to start to really weaken the ability of China to develop some of these critical technologies domestically,” Emily Kilkris said.And the Senior fellow at the Center for a New American Security, a think-tank.

Companies will no longer be allowed to supply advanced computing chips, chip-making equipment and other products to China unless they obtain a special license. Most of those licenses will be denied, although some shipments to facilities operated by US companies or allied countries will be evaluated on a case-by-case basis, a senior administration official said in a briefing Thursday.

Restrictions limit US exports of advanced chips called GPUs used to power AI applications, and broad restrictions on chips for China’s supercomputers. The rules also prohibit US-based companies that make equipment used to make advanced logic and memory chips from selling those machines to China without a license.

Perhaps most importantly, the Biden administration has also imposed broad international restrictions that would prevent companies anywhere in the world from selling chips used in artificial intelligence and supercomputing in China, if they were made using American technology, software, or machines. The restrictions used the so-called Foreign Direct Products rule, which former President Donald J. Trump used to cripple Huawei.

Another FDI rule prohibits sending a larger selection of products made outside the United States using American technology to 28 Chinese companies that have been placed on the “Entity List” due to national security concerns.

Those companies include Beijing Sensetime Technology Development, a unit of Chinese AI major SenseTime. It also included Dahua Technology, Higon, IFLYTEK, Megvii Technology, Sugon, Tianjian Phytium Information Technology, Sunway Microelectronics, Yitu Technologies, as well as a variety of laboratories and research institutions associated with Chinese universities and government.

The rules also restrict US citizens from helping develop China’s semiconductor industry to advanced levels. Earlier on Friday, the administration announced that it would add 31 other Chinese companies and institutions to an “unverified list” limiting its ability to acquire a smaller set of some regulated US items. Among them is Yangtze Memory Technologies Co., Ltd. Ltd, which is a major manufacturer of Apple’s memory chips I thought of getting some products.

It remains to be seen whether the Chinese government will take action in response. Sam Sacks, a senior fellow at Yale Law School who studies technology policy in China, said the new rules could prompt Beijing to impose restrictions on US companies or companies from other countries that adhere to US rules but still want to maintain their operations in China.

“The question is: Will this new package cross a red line to trigger a response we haven’t seen before?” She said. “A lot of people are expecting that. I think we should wait and see.”

These actions come at a very sensitive moment for Beijing. Chinese leaders will hold a major political meeting starting Oct. 16, when leader Xi Jinping is expected to secure a third term of leadership, becoming the country’s longest-serving leader since Mao Zedong.

Liu Bingyu, a spokesman for the Chinese Embassy in Washington, said the United States is trying to “use its technological prowess as an advantage to obstruct and suppress the development of emerging markets and developing countries.”

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“It is likely that the United States will hope that China and the rest of the developing world will remain forever at the lower end of the industrial chain,” he added.

The Chinese government has invested heavily in building the semiconductor industry, but it still lags behind the United States, Taiwan and South Korea in its ability to produce the most advanced chips. In other areas, such as artificial intelligence, China is no longer significantly behind the United States, but those technologies are mostly based on advanced chips designed or manufactured by non-Chinese companies.

Some of China’s most advanced supercomputers are based on chips made by California-based Intel or Taiwan’s semiconductor manufacturer, which use US technology in their production process, said Jack Dongara, a computer scientist at the University of Tennessee, and will therefore be subject to new laws. .

In a briefing with reporters, senior administration officials said the measures would be limited to more advanced chips, and thus would not have a broad commercial impact on private Chinese companies. But they acknowledged that they could become more restrictive over time, given that technology would start to outpace them.

Industry executives say many Chinese industries that rely on artificial intelligence and advanced algorithms are bolstering these capabilities with US GPUs, which will now be constrained. Those working with technologies such as autonomous driving and gene sequencing, as well as artificial intelligence firm SenseTime and ByteDance, include the Chinese internet company that owns TikTok.

The new restrictions on sales of chip-making equipment are also expected to constrain the operations of domestic chip manufacturers in China, including International Semiconductor Manufacturer and Yangtze Memory Technologies Co., Ltd. and ChangXin Memory Technologies.

The actual impact of the restrictions will depend on how the policy is implemented. For most of the measures, the Commerce Department has the discretion to grant special licenses to companies to continue selling restricted products to China, though it said most of them would be denied.

Some Republican lawmakers and Chinese hawks have criticized the department for being too willing to issue such licenses, allowing US companies to continue selling sensitive technology to China even when national security is at stake.

“If you want to stop it, you can just stop it,” said Derek Sisori, senior fellow at the American Enterprise Institute. “When you create a licensing clause, you are announcing to the world that we don’t want to stop it. We are just pretending.”

Waivers to continue selling products to China could come under more scrutiny if Republicans regain a majority in the House after the midterm elections.

Representative Michael McCaul, R-Texas, said he intends to use his power as the current top-ranking member of the House Foreign Affairs Committee to lobby the Bureau of Industry and Security, which reviews such licenses, on requests and decisions.

“If Congress finds that the BIS is undermining the spirit of these rules with lax licensing standards, we will assess whether the Commerce Department is the appropriate home for this NSA,” Mr. McCall said.

With its vast ecosystem of factories, China remains a huge and lucrative market for US chip exports. Small technologies are essential to smartphones, laptops, coffee makers, cars and other goods that Chinese factories pump out for local consumption and export to the world.

Many US companies have long argued that their sales to China are an important source of revenue that allows them to reinvest in research and development and maintain a competitive advantage.

But dealing with China has become more difficult in the past few years, as tensions between the United States and China have turned into a Cold War rivalry. The Chinese government has sought to blur the line between its defense sector and private industry, relying on Chinese companies specializing in fields including artificial intelligence, big data, space technologies and quantum computing to support the country’s military modernization.

Chinese military exercises Intended to intimidate Taiwan, China’s alliance with Moscow in the wake of Russia’s invasion of Ukraine helped quell any Chinese goodwill in Washington, and bolstered the cause of technology regulation.

However, industry executives and some analysts argue that isolating China from foreign chips will accelerate Beijing’s drive to develop them itself and cause US companies to lose out to foreign competitors, unless other countries impose similar restrictions.

The Semiconductor Industry Association said Friday it is evaluating the impact of export controls on the industry and working with companies to ensure compliance.

“We understand the goal of ensuring national security and urge the U.S. government to implement the rules in a targeted manner — and in cooperation with international partners — to help level the playing field and mitigate unintended harm to American innovation,” she said in a statement. .

In statements last month, the Biden administration indicated that it would be getting tougher on technology regulation. Jake Sullivan National Security Adviser He said That the US government’s previous approach, of trying to survive a few generations ahead of competitors, is no longer sufficient.

“Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as much leadership as possible,” he said.

Kevin Wolf, a partner at Akin Gump who led export control efforts during the Obama administration, said the move was a “fundamental shift in the use of export controls” to address broader national security goals. Since the Cold War, most countries have used export controls more narrowly, focusing on regulating specific items that were necessary to produce or deploy weapons.

Mr. Wolf said the new measures are likely to be very effective in the short and medium term. He added that “how effective it will be in the long term will be related to whether allies will eventually agree to impose similar controls.”

Edward Wong Contribute to the preparation of reports.

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