The Biden administration has introduced new measures to block China’s access to key semiconductor technologies.
As of today, 140 Chinese companies, including major firms like Huawei and Semiconductor Manufacturing International Corporation (SMIC), have been blacklisted. In addition, US and foreign firms using American technology are barred from exporting chipmaking tools and high-bandwidth memory (HBM) chips to China.
Why go for HBM chips? HBM chips, used in AI systems and supercomputers, play a crucial role in advanced technological development by providing the bandwidth necessary to handle heavy AI system workloads.
Commerce Secretary Gina Raimondo called the restrictions “groundbreaking.” Speaking to reporters, she emphasized their goal: “These measures are the strongest controls ever enacted by the US to degrade the People’s Republic of China’s ability to make the most advanced chips that they’re using in their military modernization.”
Japan and the Netherlands have secured exemptions after agreeing to similar measures. These exemptions were likely brokered through extensive negotiations over the past year. However, South Korea and Singapore, remain affected.
“This action is the culmination of the Biden-Harris Administration’s targeted approach, in concert with our allies and partners, to impair the PRC’s ability to indigenize the production of advanced technologies that pose a risk to our national security,” Gina Raimondo said in a statement. “No Administration has been tougher in strategically addressing China’s military modernization through export controls.”
What’s Behind the Ban?
The ban’s designed to thwart China’s ability to develop next-gen chips domestically. These chips are essential for AI, military technology, and global tech leadership.
Critics, however, argue the controls leave some gaps. One example is Chinese memory chipmaker CXMT, which produces HBM chips but has not been added to the U.S. blacklist. Gregory Allen, an expert at the Center for Strategic and International Studies, told the FT that this decision is a “bizarre contradiction.”
Industry Reactions
While American companies like Applied Materials and Lam Research support the government’s push to protect national security, they are wary of losing revenue from China, a key market.
Asian chipmakers are also assessing the fallout. South Korea’s SK Hynix and Samsung, as well as Taiwan Semiconductor Manufacturing Company (TSMC), are among those most affected by the HBM restrictions.
How Do These Restrictions Work?
The new rules leverage the Foreign Direct Product Rule (FDPR), which gives the US authority to control goods made abroad using even minor amounts of American technology. This approach is to prevent companies from sidestepping restrictions by moving manufacturing to other countries.
Notably, the rules target 24 chipmaking tools and advanced HBM chips like HBM2.
Long-Term Implications
This latest escalation signals Washington’s determination to limit Beijing’s technological ambitions. While the restrictions will undoubtedly slow China’s progress, analysts warn that they may also strain relations with allies and disrupt global tech supply chains.