The Biden Administration plans to further restrict shipments to China of advanced semiconductors, specifically this round will include artificial intelligence (AI) chips made by Nvidia and others.
The move continues measures taken by the U.S. and other countries over the past five years to slow cutting-edge technologies from being sent to Chinese manufacturers and foundries.
The goal of the restrictions is to reduce Chinese access to sophisticated chipmaking equipment like high-performance computing (HPC) chips. Additionally, the U.S. and other allied countries have rallied together to stop the flow of advanced semiconductor equipment needed to manufacture HPC and other advanced chips.
“These export controls are intended to protect technologies that have clear national security or human rights implications,” said Gina Raimondo, U.S. Commerce Secretary. “The vast majority of semiconductors will remain unrestricted. But when we identify national security or human rights threats, we will act decisively and in concert with our allies.”
Unpopular move
The Biden administration has shown no sign of slowing export restrictions to China despite calls from semiconductor vendors and trade organizations like the Semiconductor Industry Association (SIA) to curb further restrictions. Companies like Intel, Qualcomm and Nvidia met with the U.S. government earlier this year to protect profits as China accounts for a third of the global chip sales and is the largest single market in the world for many technologies such as those used in the automotive industry.
The SIA, which represents 99% of the U.S. chip industry by revenue and nearly two-thirds of non-U.S. chip firms, said that although protecting national security is important, there needs to be a balanced approach to the U.S. semiconductor manufacturing industry.
“Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere,” the SIA said in a statement. “Accordingly, we urge the administration to strengthen coordination with allies to ensure a level playing field for all companies.”
Previous restrictions
China export restrictions started during the Trump Administration when it put communications equipment maker Huawei on its Entity List under the Department of Commerce.
The U.S. then expanded the restrictions to pure-play foundry SMIC and other companies. Later, the USDOC expanded restrictions on high-performance computing such as CPUs and GPUs, which includes not only domestic companies in mainland China but also U.S.-based suppliers and U.S. citizens from helping support China’s chip development.
Early this year, the U.S. stopped approval of export licenses for companies looking to do business with Chinese electronic equipment vendor Huawei. As a result, DRAM makers like SK Hynix and Samsung have considered selling their fabs because they can’t get access to semiconductor equipment.
China’s legacy move
As a result of the export restrictions in the country, China has been looking to develop domestically made semiconductors. Recently, the country launched a $40 billion state-backed investment fund aimed at ramping up HPC semiconductors.
Known as China Integrated Circuit Industry Investment Fund, or Big Fund, a main area of investment will be equipment for chip manufacturing — one of the main areas hit hardest by the US’ export restrictions in China.
According to market research firm TrendForce, China is also working to expand its mature process nodes due to it being able to still purchase semiconductor equipment like 55 nm, 40 nm and 28 nm technologies.
