US hits China with sweeping tech export controls

The United States has introduced sweeping export controls that would severely complicate efforts by Chinese companies to develop advanced technologies with military applications, in one of President Joe Biden’s toughest actions against China.

On Friday, the Ministry of Commerce revealed restrictions that will make it very difficult for Chinese companies To obtain or manufacture advanced computer chips And it will slow their progress in artificial intelligence.

The measures are also designed to make it more difficult for China to develop supercomputers with military applications ranging from modeling nuclear weapons to the search for hypersonic weapons.

The controls represent a new attempt to separate China from the United States in cutting-edge technologies. They come days before the Chinese Communist Party convene Twentieth National Congress President Xi Jinping is expected to conclude a third term as leader.

Paul Triulo, a China expert and technical expert at consultancy Albright Stonebridge, said the action was a “major turning point” in US-China relations and in the increasingly intense technology competition between the two countries.

“The United States has essentially declared war on China’s ability to promote the country’s use of high-performance computing for economic and security gain,” Triollo said.

The controls will hit Chinese companies in multiple ways. They will prevent US companies from exporting critical chip-making tools to China, affecting groups such as Semiconductor Manufacturing International Corp, Yangtze Memory Technologies Co and ChangXin Memory. It will also prevent US citizens and companies from providing any kind of direct or indirect support to semiconductor manufacturing plants in China.

The US has also put the YMTC – along with 30 other Chinese entities – on a list of “unverified” companies, paving the way for a possible inclusion on a separate blacklist called the “Entity List” that would effectively prevent US companies from supplying it with the technology.

The administration’s strategy is to deny China the ability to localize its semiconductor industry. “If the United States succeeds, this causes a huge problem for Beijing’s strategy to be a global player,” said Martin Rasser, a security and technology expert at the Center for a New American Security, a think-tank.

Emphasizing the scope of the controls, the United States is using a far-reaching mechanism called the “Foreign Direct Product Rule” to make it difficult for China to develop and maintain supercomputers and artificial intelligence technology.

The rule — first used by the Trump administration against Chinese technology group Huawei — in effect prohibits any US or non-US company from providing targeted Chinese entities with hardware or software that contains or was manufactured with US technology.

But in an effort to reduce supply chain disruptions, the administration will create an exception for chipmaking facilities in China owned by companies from the United States or allied countries that export chips.

“People’s republic of China [People’s Republic of China] It has poured resources into developing supercomputing capabilities and aims to become a world leader in artificial intelligence by 2030. It is using these capabilities to monitor, track and control its citizens, fueling military modernization, said Thea Kindler, chief official of the Department of Official Commerce. “Our actions will protect the national security of the United States.”

Analysts said memory chip makers in China, including YMTC and ChangXin Memory, would feel the biggest immediate hit.

“They are basically doomed,” said Mark Lee, a semiconductor analyst at Bernstein in Hong Kong. It will be difficult for them to get the equipment they need.

But a ban on the export of semiconductor tools could hit Chinese chip makers more broadly because US equipment makers have a stifling grip in a few key areas.

Triollo said there would be “lots of losers,” including US chip design leaders such as Nvidia and AMD, and tool makers including Applied Materials and Lam Research. He said the rules would also hit non-US players, including ASML, the Dutch company that produces more advanced semiconductor tools, and TSMC, a Taiwanese contract foundry.

One chip industry executive said the US was attacking China “from all angles”.

“The amazing thing about this step is that they put together a whole bunch of tools,” the executive said. “They are not only targeting military applications, they are trying to obstruct the development of China’s technological power by any means.”

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