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How Biden’s Chip Actions May Be Broadest China Salvo Yet
The Biden administration’s latest curbs encompass three broad categories, though questions remain about their scope and final impact, as well as Washington’s ability to enforce them.
Bloomberg News
October 10, 2022
3 Min Read
Bloomberg
(Bloomberg) -- Washington unveiled sweeping curbs on the way chip companies do business with China’s tech industry, a series of restrictions that together represent some of the strongest actions taken so far to contain the rise of a geopolitical rival.
The actions, which incensed Beijing and provoked accusations of unfair targeting, threaten to disrupt a global economy already dealing with a potential recession, soaring inflation and lingering supply snarls. Some analysts warn it could strike a further blow to companies from Nvidia Corp. and Taiwan Semiconductor Manufacturing Co. to Applied Materials Inc., as well as a raft of Chinese up-and-comers, that underpin the $550 billion chip industry.
Depending on how broadly Washington enforces the restrictions, the impact could extend well beyond semiconductors and into industries that rely on high-end computing, from electric vehicles and aerospace to gadgets like smartphones. The Biden administration’s latest curbs encompass three broad categories, though questions remain about their scope and final impact, as well as Washington’s ability to enforce them. These include:
1. Ban on the shipment of chips for AI and high-performance computing, plus gear that can used to manufacture such semiconductors.
The new restrictions, first announced by Nvidia in exchange filings in September, are intended to sever the flow of US know-how to China’s military and surveillance systems
They will hurt Nvidia and Advanced Micro Devices Inc.’s business in China, in particular
It’s unclear whether the bans may curtail the flow of older chips, which can be upgraded or modified for use in modern AI computing
China’s AI chipmakers, including Biren, may face some restrictions on outsourcing production to TSMC
It’s unclear if restrictions extend to older-generation equipment from non-American firms such as ASML Holding NV and Tokyo Electron Ltd. More mature-generation gear can in theory be used to produce current-generation components.
2. Chipmaking gear restrictions that cover production of both logic and memory chips. The ban now encompasses tools for:
Logic chips using so-called nonplanar transistors made with 16-nanometer technology or anything more advanced than that. Generally speaking, the smaller the nanometers, the more capable the chip
18-nanometer dynamic random access memory chips
Nand-style flash memory chips with 128 layers or more
Foreign companies such as Samsung Electronics Co. and SK Hynix Inc. can apply for licenses to continue acquiring machinery they need for their plants in China
The new rules also cover broad, de facto prohibitions on US persons “supporting” the development or manufacture of chips covered by the restrictions.
3. An expanded and beefed-up Unverified List that acts as a precursor to the Entity List, which in turn bans exports of American designs and technology to members such as Huawei Technologies Co.
New members include Yangtze Memory Technologies Co., China’s largest and most advanced maker of memory chips
A subsidiary of China’s leading chip production equipment maker, Naura Technology Group Co., was also included
Notably, the US can now migrate companies swiftly from the list to the Entity List, if firms don’t clarify their status within two months. That more severe step effectively blocks companies from buying US technology
It strikes directly at Beijing’s multibillion-dollar effort to build a world-class semiconductor industry and replace American technology. The country’s chipmaking champions, which include top chipmaker Semiconductor Manufacturing International Corp., haven’t responded publicly to the actions.
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