US President Joe Biden’s administration plans to unveil a new rule next month that would expand US powers to stop exports of semiconductor manufacturing equipment from some foreign countries to Chinese chipmakers, two sources familiar with the rule said.
However, shipments from allies that export key chipmaking equipment — including Japan, the Netherlands and South Korea — would be excluded, limiting the impact of the rule, the sources said.
As such, major chip equipment manufacturers such as ASML Holding NV and Tokyo Electron Ltd would not be affected.
Photo: Reuters
The rule, an expansion of what is known as the Foreign Direct Product rule, would bar about half a dozen Chinese fabs at the center of China’s most sophisticated chipmaking efforts from receiving exports from many countries, one of the sources said.
Places whose exports would be affected would include Taiwan, Israel, Singapore and Malaysia.
Aiming to impede supercomputing and AI breakthroughs that could benefit the Chinese military, the US imposed export controls on chips and chipmaking equipment for China in 2022 and last year.
The Foreign Direct Product rule stipulates that if a product is made using US technology, Washington has the power to stop it from being sold — including products made in a foreign country.
The new rule, currently in draft form, shows how Washington is seeking to keep up the pressure on China’s burgeoning semiconductor industry, but without antagonizing allies.
Another part of this latest export control package would lower the amount of US content that determines when foreign items are subject to US control, sources said, adding that it closes a loophole in the Foreign Direct Product rule.
Equipment, for example, could be designated as falling under export controls simply because a chip containing US technology is incorporated into it, they said.
The US also plans to add about 120 Chinese entities to its restricted trade list which would include a half dozen chipmaking factories, plus toolmakers, providers of electronic design automation software and related companies.
The planned new rule could change, but the aim is to publish it in some form next month, the sources said.
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