Exclusive: Biden to hit China with broader curbs on US chip and tool exports

Exclusive: Biden to hit China with broader curbs on US chip and tool exports

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WASHINGTON, Sept 11 (Reuters) – The Biden administration plans next month to expand restrictions on U.S. shipments to China of semiconductors used for artificial intelligence and chip-making tools, several people said. close to the file.

The Commerce Department intends to issue new regulations based on the restrictions communicated in letters earlier this year to three US companies – KLA Corp (KLAC.O), Lam Research Corp (LRCX.O) and Applied Materials Inc. (AMAT.O), the people said, speaking on condition of anonymity. The draft new rules were not previously announced.

The letters, which the companies have publicly acknowledged, prohibited them from exporting chipmaking equipment to Chinese factories that produce advanced semiconductors with processes below 14 nanometers unless the sellers obtain licenses from the Commerce Department.

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The rules would also codify restrictions in Commerce Department letters sent to Nvidia Corp (NVDA.O) and Advanced Micro Devices (AMD.O) last month ordering them to halt shipments of several artificial intelligence computer chips to China unless they get licenses. Read more

Some of the sources said the regulations would likely include additional actions against China. The restrictions could also be changed and the rules published later than expected.

The so-called “is informed” letters allow the Commerce Department to bypass lengthy rule-writing processes to quickly put controls in place, but the letters apply only to companies that receive them.

Turning the letters into rules would broaden their reach and could subject other US companies producing similar technology to the restrictions. The regulations could potentially apply to companies trying to challenge Nvidia and AMD’s dominance in artificial intelligence chips.

Intel Corp (INTC.O) and startups like Cerebras Systems are targeting the same advanced computing markets. Intel said it was monitoring the situation closely, while Cerebras declined to comment.

A source said the rules could also impose licensing requirements on shipments to China of products containing the targeted chips. Dell Technologies (DELL.N), Hewlett Packard Enterprise (HPE.N) and Super Micro Computer (SMCI.O) manufacture data center servers that contain Nvidia’s A100 chip.

Dell and HPE said they are monitoring the situation, while Super Micro Computer did not respond to a request for comment.

A senior Commerce official declined to comment on the upcoming action, but said: “As a general rule, we seek to codify any restrictions that are in informed letters with a regulatory change.”

Semiconductor chips are seen on a computer circuit board in this illustrative photo taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo

A Commerce Department spokesperson on Friday declined to comment on specific regulations, but reiterated that it “takes a comprehensive approach to implementing additional actions…to protect national security and foreign policy interests.” of the United States”, in particular to prevent China from acquiring American technology. applicable to military modernization.

KLA, Applied Materials and Nvidia declined to comment while Lam did not respond to requests for comment. AMD did not comment on the specific policy change, but reaffirmed that it does not anticipate any “material impact” from its new licensing requirement.

‘PLUG AREA’

The planned action comes as President Joe Biden’s administration has sought to thwart China’s advances by targeting technologies over which the United States still maintains dominance.

“The strategy is to stifle China and they’ve found that the chips are a choke point. They can’t make this hardware, they can’t make the manufacturing equipment,” said tech expert Jim Lewis. 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 US business lobby group, warned members of impending restrictions on AI chips and chip-making tools.

“We hear now that members should expect a set of rules or perhaps a blanket rule before the midterm elections to codify the guidelines in the recently released letters (Department of Commerce)” is advised “at hardware and chip design companies,” Chamber said.

The group also said the agency plans to add other Chinese supercomputing entities to a commercial blacklist.

Reuters was first to report in July that the Biden administration was actively discussing banning exports of chipmaking tools to Chinese factories that make advanced semiconductors at the 14-nanometer node and smaller. Read more

U.S. officials have reached out to allies to pressure them to adopt similar policies so foreign companies won’t be able to sell technology to China that U.S. companies wouldn’t be allowed to ship, said two of the sources.

“Coordination with allies is key to maximizing efficiency and minimizing unintended consequences,” said Clete Willems, a former Trump administration trade official. “This should favor broader regulations that others can replicate instead of one-off ‘is informed’ letters.”

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Reporting by Karen Freifeld and Alexandra Alper; Additional reporting by Stephen Nellis and Jane Lanhee Lee; Editing by Chris Sanders and Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.

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