U.S. Tightens Grip on Chinese Chips: New Export Rule Excludes Key Allies

The Biden administration plans to announce a new rule expanding U.S. powers to block semiconductor manufacturing equipment exports to Chinese chipmakers. However, key allies like Japan, the Netherlands, and South Korea will be exempt. The rule aims to restrict China's semiconductor advancements without straining U.S. diplomatic relations.

The Biden administration is preparing to unveil a new rule next month aimed at expanding U.S. powers to restrict semiconductor manufacturing equipment exports to Chinese chipmakers. According to two sources familiar with the rule, exports from major allies like Japan, the Netherlands, and South Korea will be excluded, thereby limiting the rule's overall impact.

Major chip equipment manufacturers such as ASML and Tokyo Electron will not be affected by the new rule, leading to a surge in their shares. The Foreign Direct Product rule, which will be expanded under the new directive, aims to block approximately half a dozen Chinese wafer fabrication plants central to China's advanced chipmaking efforts from receiving international exports.

While countries like Israel, Taiwan, Singapore, and Malaysia will see their exports affected, Reuters has yet to determine the specific Chinese fabs impacted. A spokesperson for the U.S. Commerce Department declined to comment, while a Chinese foreign ministry spokesperson criticized the U.S. efforts as damaging to global trade. Despite these export controls, China remains determined to achieve scientific and technological self-reliance.