Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Exclusive-Biden to hit China with broader curbs on U.S. chip and tool exports -sources

World Sep 15, 2022 08:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo
 
INTC
-1.11%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
DELL
+0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMAT
-1.72%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
LRCX
-1.77%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NVDA
-1.51%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
AMD
-1.65%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Karen Freifeld and Alexandra Alper

WASHINGTON(Reuters) -The Biden administration plans next month to broaden curbs on U.S shipments to China of semiconductors used for artificial intelligence and chipmaking tools, several people familiar with the matter said.

The Commerce Department intends to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies -- KLA Corp, Lam Research Corp (NASDAQ:LRCX) and Applied Materials Inc (NASDAQ:AMAT), the people said, speaking on the condition of anonymity.

The letters, which the companies publicly acknowledged, forbade them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with sub-14 nanometer processes unless the sellers obtain Commerce Department licenses.

The rules would also codify restrictions in Commerce Department letters sent to Nvidia (NASDAQ:NVDA) Corp and Advanced Micro Devices (NASDAQ:AMD) last month instructing them to halt shipments of several artificial intelligence computing chips to China unless they obtain licenses.

Some of the sources said the regulations would likely include additional actions against China. The restrictions could also be changed and the rules published later than expected.

So-called "is informed" letters allow the Commerce Department to bypass lengthy rule-writing processes to put controls in place quickly, but the letters only apply to the companies that receive them.

Turning the letters into rules would broaden their reach and could subject other U.S. companies producing similar technology to the restrictions. The regulations could potentially apply to companies trying to challenge Nvidia and AMD's dominance in artificial intelligence chips.

Intel Corp (NASDAQ:INTC) and startups like Cerebras Systems are targeting the same advanced computing markets. Intel said it is closely monitoring the situation, while Cerebras declined to comment.

One source said the rules could also impose license requirements on shipments to China of products that contain the targeted chips. Dell Technologies (NYSE:DELL), Hewlett Packard Enterprise (NYSE:HPE) and Super Micro Computer (NASDAQ:SMCI) make data center servers that contain Nvidia's A100 chip.

Dell and HPE said they were monitoring the situation, while Super Micro Computer did not respond to a request for comment.

A senior Commerce official declined to comment on the upcoming action, but said: "As a general rule, we look to codify any restrictions that are in is-informed letters with a regulatory change."

A spokesperson for the Commerce Department on Friday declined to comment on specific regulations but reiterated that it is "taking a comprehensive approach to implement additional actions...to protect U.S. national security and foreign policy interests," including to keep China from acquiring U.S. technology applicable to military modernization. 

Liu Pengyu, a spokesperson for the Chinese Embassy in Washington, said on Tuesday that China opposes the United States'"abuse of export control measures to restrict the export of semiconductor-related items to China." The upcoming restrictions violate international trade rules, harm global growth and hurt U.S. and Chinese companies, he said.

KLA, Applied Materials and Nvidia declined to comment while Lam did not respond to requests for comment. AMD did not comment on the specific policy move but reaffirmed it does not foresee a "material impact" from its new licensing requirement.

'CHOKE POINT'

The planned action comes as the President Joe Biden's administration has sought to thwart China's advances by targeting technologies where the United States still maintains dominance.

"The strategy is to choke off China and they have discovered that chips are a choke point. They can't make this stuff, they can't make the manufacturing equipment," said Jim Lewis a technology expert at the Center for Strategic and International Studies. "That will change."

In an update on China-related measures last week, the Chamber of Commerce, a U.S. business lobbying group, warned members of imminent restrictions on AI chips and chipmaking tools.

"We are now hearing that members should expect a series of rules or perhaps an overarching rule prior to the mid-term election to codify the guidance in recently issued (Commerce Department) 'is-informed' letters to chip equipment and chip design companies," the chamber said.

The group also said the agency plans to add additional Chinese supercomputing entities to a trade blacklist.

Reuters was first to report in July that the Biden administration was actively discussing banning exports of chipmaking tools to Chinese factories that make advanced semiconductors at the 14 nanometer node and smaller. Tech news outlet Protocol reported plans to turn the letters sent to toolmakers into a regulation last month. Other elements of the rules, including the curbs on AI chip exports and the October release date, were first reported by Reuters.

U.S. officials have reached out to allies to lobby them to enact similar policies so that foreign companies would not be able to sell technology to China that American firms would be barred from shipping, two of the sources said.

“Coordination with allies is key to maximizing effectiveness and minimizing unintended consequences," Clete Willems, a former Trump administration trade official said. "This should favor broader regulations that others can replicate instead of one-off 'is informed' letters."

Exclusive-Biden to hit China with broader curbs on U.S. chip and tool exports -sources
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Todd Gray
Todd Gray Sep 17, 2022 9:54PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Some of those corporations are making those chips in China. So, China still gets the chips.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email