The Biden administration intends next month to extend curbs on U.S shipments to China of semiconductors used for chipmaking tools and artificial intelligence, several people with knowledge of the matter said.
In that context, the Commerce Department plans to announce new regulations based on restrictions mentioned in letters earlier in the year to three U.S. companies — Lam Research Corp (LRCX.O), KLA Corp (KLAC.O), and Applied Materials Inc (AMAT.O), the people said, speaking on the condition of remaining unnamed. The plan for new regulations has not been previously announced.
The letters, which the companies publicly agreed to, prohibited them from exporting chipmaking equipment to Chinese factories that manufacture advanced semiconductors with sub-14 nanometer processes unless the sellers acquire Commerce Department licenses.
These regulations would also summarize restrictions in Commerce Department letters sent to Advanced Micro Devices (AMD.O) and Nvidia Corp (NVDA.O) in August ordering them to stop shipments of several artificial intelligence computing chips to China unless they acquire licenses.
Some of the sources said the regulations would possibly contain further actions against China. The restrictions could also be altered and the regulations published later than anticipated. So-called “is informed” letters enable the Commerce Department to evade lengthy rule-writing processes to lay controls in place immediately, but the letters are only relevant to the companies that receive them.
Turning the letters into regulations would extend their reach and could expose other U.S. companies developing similar technology to the restrictions. The regulations could possibly affect companies trying to challenge AMD and Nvidia’s dominance in artificial intelligence chips.
Intel Corp (INTC.O) and startups like Cerebras Systems are aiming at the same advanced computing markets. Intel said it is carefully monitoring the situation, while Cerebras refused to comment.
One source said the regulations could also enforce license requirements on shipments to China of products that consist of the targeted chips. Super Micro Computer (SMCI.O), Hewlett Packard Enterprise (HPE.N), and Dell Technologies (DELL.N) make data centre servers that contain Nvidia’s A100 chip.
HPE and Dell said they were addressing the situation, while Super Micro Computer failed to respond to a request for comment. A senior Commerce official refused 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 refused to comment on specific regulations but restated that it is “taking a comprehensive approach to implement additional actions…to protect U.S. national security and foreign policy interests,” including to prevent China from obtaining U.S. technology applicable to military modernization.
Nvidia, Applied Materials, and KLA refused to comment while Lam failed to respond to requests for comment. AMD did not comment on the exact policy move but reiterated it does not expect a “material impact” from its new licensing requirement.Buy Bitcoin Now
The proposed action comes as President Joe Biden’s administration has attempted to hamper China’s advances by aiming at 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, cautioned members of impending restrictions on chipmaking tools and AI chips.
The chamber stated:
“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 group also said the agency intends to add other Chinese supercomputing entities to a trade blacklist. Reuters was first to post in July that the Biden administration was actively looking at barring exports of chipmaking tools to Chinese factories that produce advanced semiconductors at the 14-nanometer node and smaller.
U.S. officials have contacted allies to lobby them to impose similar policies so that foreign companies would not be able to sell technology to China that American firms would be banned 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.”