Biden Tightens Tech Controls on China as Clock Ticks Down
The Biden administration announced Monday a long-anticipated round of restrictions on exports of semiconductor chips and chipmaking equipment to China in one of its last salvos aimed at slowing Beijing's pursuit of self-reliance in a key national-security realm: advanced chip technology.
The package, delayed for months as the administration sought to bring foreign partners aboard and address industry concerns, is the latest in a series of controls that began under the first Trump administration. Commerce Secretary Gina Raimondo called the new actions "groundbreaking and sweeping" and said they were the "strongest … ever enacted" by the United States to degrade China's ability to make chips to fuel its military ambitions.
The new rules block shipment to China of specialized equipment used to manufacture cutting-edge chips, as well as a type of chip called "high bandwidth memory" that is a building block of AI data centers. The Commerce Department also added 140 entities associated with China's chip sector to a blacklist, restricting their ability to do business with U.S. companies.
The Commerce Department's Bureau of Industry and Security said the rules would curb China's ability to develop advanced military and intelligence applications, cyber operations and mass surveillance technologies.
But the latest round packs far less punch than it might have, several U.S. officials and analysts said, because of the administration's apparent desire to accommodate American chip machinery firms and Dutch and Japanese equipment-makers and their governments. The delay those negotiations caused also allowed China to stockpile tools and components, the officials and analysts said, speaking on the condition of anonymity to discuss negotiations pursued outside the public eye.
"These controls are weaker than what the United States should have done," said Gregory C. Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies. "You can make a halfway logical argument that says, 'Sell everything to China.' Then you can make a reasonable argument, 'Sell very little to China.' But the worst thing you can do is to dramatically signal your intention to cut off China's access to tech but then have so many loopholes and such bungled implementation that you incur almost all of the costs of the policy with only a fraction of the benefits.''
The newly blacklisted entities include 10 that the Commerce Department said posed a "significant risk" of contributing to the efforts of Huawei Technologies, China's leading chip designer and the world's largest supplier of the "pipes" that make up the global internet. These entities include Shenzhen Pengxinxu Technology and SwaySure Technology, which are now barred from receiving U.S. technologies but still may apply for exceptions.
However, the sanctioned firms to be placed on the Commerce Department's Entity List do not include some factories or "fabs" that the administration was considering including before it encountered pressure from allies and American industries, the officials and analysts said.
Spokesmen for the Dutch and Japanese governments declined to comment.
Among the excluded fabs is ChangXin Memory Technologies Inc. or CXMT, which is one of China's largest memory chipmakers and is seeking to develop AI memory chips, including for Huawei, analysts said.
Also excluded were several factories run by China's largest chipmaker, SMIC, that were built after SMIC was placed on the Entity List by the Trump administration in 2020, according to the analysts. Those new fabs may continue to receive U.S. technology that is not otherwise banned.
The new controls are strong in some ways, analysts say. For instance, the United States will apply a powerful rule that bars foreign firms from furnishing products to the blacklisted factories if those products have a modicum of U.S. technology in them. And in a novel use of the "foreign direct product rule" (FDPR), the administration will bar any such product from being sent to the blacklisted fab if it contains even a single chip that was designed or made with American technology.
Source : Bloomberg
