U.S. Expands Semiconductor Export Controls Amid Pressure on China

The Biden administration plans to introduce a new rule expanding U.S. powers to halt exports of semiconductor manufacturing equipment from certain countries to Chinese chipmakers. Allies like Japan, the Netherlands, and South Korea will be exempt to minimize diplomatic fallout. The move seeks to curb China's semiconductor advancements, particularly in military applications.

The Biden administration intends to unveil a new rule next month broadening U.S. powers to restrict exports of semiconductor manufacturing equipment from select countries to Chinese chipmakers, two sources familiar with the matter disclosed.

Crucially, exports from allies that supply essential chipmaking equipment, such as Japan, the Netherlands, and South Korea, will be excluded, limiting the rule's reach. The Foreign Direct Product rule, under which these changes fall, aims to block exports to about half a dozen Chinese fabs at the heart of China's advanced chipmaking sector.

Washington's goal is to stymie China's progress in supercomputing and AI, preventing potential military applications, while maintaining diplomatic harmony. The rule, in draft form, emphasizes retaining American control over technology used globally, including adding about 120 Chinese entities to a restricted trade list. This includes designated chipmaking factories, EDA software providers, and related companies.