New Restrictions in Order as US Takes Aim at China’s Semiconductor Industry Ambitions: Report

The Biden administration is ramping up its efforts to contain China’s ability to make cutting-edge circuitry by preparing export controls which will further impact its semiconductor sector.

According to a report by the Wall Street Journal which cited people familiar with the developments, the administration placed new restrictions on some US exports of chips which are used for artificial-intelligence calculations and manufacturing equipment.

The report said the manufacturing equipment would be used to make powerful chips which could undertake a large number of calculations.

There are also newer measures on the table. The administration is also targeting high-end memory-chip manufacturing capabilities and advanced components which are used in some of the most advanced chip-making tools, the WSJ said in a report.

The administration is also targeting advanced quantum computing chips.

The Commerce Department’s entity list will see more Chinese technology companies being added to the list.

The US is also engaging its allies to ensure that China does not get access to tools needed to strengthen its semiconductor sector, the people mentioned above told the WSJ. The formal announcements could be made as early as this week, they added.

China’s semiconductor industry growth could face a stumbling block as the US, South Korea and European countries could enforce joint export restrictions as they hold a near-monopoly over production and sales of key equipment and software required to build these hyper-advanced chips.

The Dutch government has been engaged via diplomatic efforts to restrict Chinese access to machinery and they were urged to block sales of equipment developed by semiconductor major ASML Holding NV.

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The US has had China’s semiconductor industry in its crosshairs for a long time and it has sought to restrict its development by placing telecom giant Huawei Technologies Co. and its largest chip maker, Semiconductor Manufacturing International Corp (SMIC) in the Commerce Department’s export blacklist.

The Biden administration has maintained a grip on China’s semiconductor sector growth in a manner similar to his predecessor Donald Trump who started a trade war with China in order to stunt the growth of their chip industry.

The US and several of its allies are worried about national security issues as the semiconductor industry shifted outside the US. Advanced chips are essential tools for militaries as well as for the modern global economy making it a pillar of geopolitical power, the Wall Street Journal reports.

The US is taking steps like tax breaks, factory-building grants and research funding to reroute the semiconductor industry based in Asian economies back to the US. US president Joe Biden and the US Congress passed a funding of $77 billion in total, in August, to strengthen those efforts.

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