The USA’s Foreign Direct Product (FDP) rule now includes crucial equipment from Malaysia, Singapore, Israel, Taiwan, and South Korea, while exempting the Netherlands and Japan.
In a bid to solidify the USA’s semiconductor industry and hinder China’s advancement in semiconductor manufacturing and artificial intelligence (AI) technologies, the US government has again implemented its third major crackdown in three years on China’s semiconductor industry, imposing new export restrictions on 140 Chinese companies, including Naura Technology Group.
The initiative to curb Beijing’s chipmaking ambitions is set to impact Chinese chip tool manufacturers Piotech and SiCarrier Technology through new export restrictions. This strategy also targets advanced memory chip shipments and additional chipmaking tools to China. The action represents one of the Biden Administration’s significant final attempts to disrupt China’s capability to access and produce chips that could bolster advancements in artificial intelligence, particularly for military purposes, thereby safeguarding U.S. national security from potential threats.
The new restrictions impose significant limitations on shipments of high bandwidth memory (HBM) chips to China, crucial for advanced applications like AI training. Additionally, there are fresh limitations on 24 more chipmaking tools and three essential software tools, alongside export controls affecting chipmaking equipment produced in countries such as Singapore and Malaysia. Notably, nearly two dozen semiconductor firms, a couple of investment companies, and over 100 chipmaking tool manufacturers in China will be impacted by these stringent measures, according to sources.
U.S. lawmakers and the Commerce Department have identified several companies, including Swaysure Technology Co, Qingdao SiEn, and Shenzhen Pensun Technology Co, as key partners of China’s Huawei Technologies. Once constrained by stringent U.S. sanctions, Huawei has emerged as a leader in advanced chip production and development within China. To protect national interests, these companies will soon be added to the entity list, which prohibits U.S. suppliers from engaging in trade with them without first obtaining a special license. This action underscores the urgency of safeguarding technology and ensuring compliance with U.S. regulations.
In a significant move, the U.S. is set to add two key players in the chip investment sector to the entity list for the first time. Chinese private equity firm Wise Road Capital and technology firm Wingtech Technology Co will be included. This decision underscores the challenges companies face, as those seeking licenses to ship to firms on the Entity List typically encounter denials.
The measures include expanding the Foreign Direct Product (FDP) rule to encompass equipment from countries such as Malaysia, Singapore, Israel, Taiwan, and South Korea, while exempting the Netherlands and Japan. This expansion allows the U.S. to regulate any foreign-produced item shipped to China if it contains any U.S. chips, effectively lowering the threshold of U.S. content that triggers U.S. control to zero.
A recent regulation imposes limitations on the memory utilized in AI chips that meet the specifications of “HBM 2” and beyond, which are produced by leading manufacturers like Samsung and SK Hynix from South Korea, as well as Micron from the U.S. Industry insiders believe that only Samsung Electronics will face significant repercussions from this ruling. This latest set of restrictions marks the third significant wave of chip-related export limitations directed at China under the Biden administration, underscoring a pivotal shift in tech export policies that aim to protect national interests.
