U.S. Tightens Chip Export Controls Amid Rising Tensions with China

The Biden administration is preparing to unveil a rule expanding U.S. control over semiconductor equipment exports to China. Exemptions apply to allies like Japan and the Netherlands but not to countries such as Israel and Taiwan. Major chip equipment manufacturers aren't expected to be affected by this rule.

The Biden administration plans to introduce a groundbreaking regulation next month, extending U.S. jurisdiction to impede exports of semiconductor manufacturing equipment from select foreign countries to Chinese chipmakers, anonymous sources have revealed. Such shipments from crucial allies, including Japan, the Netherlands, and South Korea, will be exempted, thereby minimizing the rule's extensive impact.

This decision ensures that significant chip equipment manufacturers, such as ASML and Tokyo Electron, remain unaffected. Consequently, Tokyo Electron's shares saw a 7% rise following this announcement. Notably, other Japanese firms involved in chip equipment also recorded substantial gains with Screen Holdings and Advantest increasing by 9% and 4.5%, respectively.

The regulatory expansion, an extension of the Foreign Direct Product rule, may prevent up to a half dozen Chinese fabs central to China's advanced chipmaking from accessing exports from various countries like Israel, Taiwan, Singapore, and Malaysia, as per one of the sources. Although the exact Chinese fabs targeted remain undisclosed, the U.S. Commerce Department has refrained from commenting.