The Biden administration will expand its limitations on U.S. shipments of semiconductors and chipmaking tools to China as it seeks to increase competition with the Asian superpower on innovation.
The Commerce Department intends to release new regulations in the next few months on chips, according to letters viewed by Reuters from KLA, Lam Research, and Applied Materials. The three companies were told they were forbidden from exporting chipmaking tools to Chinese factories unless they obtained Commerce Department licenses.
The “is-informed” letters act as an expedited tool for the Commerce Department to implement new rules and restrictions quickly but limit the rulings to singular companies in the process. A Commerce Department official declined to comment but said, “As a general rule, we look to codify any restrictions that are in is-informed letters with a regulatory change.”
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While the letters appear to affect chip sales by the three companies directly, it is possible that the sales limitations could affect businesses that sell computers that include the parts, such as Dell and HPE. Other competitors are also watching to see if they will receive similar letters.
The newly announced limitations arrived weeks after the Commerce Department told the semiconductor companies Nvidia and AMD that they could not provide chips for developing artificial intelligence to China.
The Nvidia ban specifically affects A100 and H100 chips, according to a September Securities and Exchange Commission filing, and will cost the company $400 million in sales to China. The H100 is considered the flagship chip for Nvidia and will notably affect the company’s economic plans for the upcoming year.
The company later said officials have allowed Nvidia to continue exports and in-country transfers to support customers requiring A100 chips until Sept. 1, 2023. It also said officials agreed to allow it to fulfill chip orders through its Hong Kong production facility during that period.
The U.S. government has restricted technology exports to China for several years. The efforts have escalated in recent years, although the Commerce Department has done very little to curtail the trade of tech in reality beyond requiring licenses.
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President Joe Biden sparked a surge of interest in U.S. chips in August when he passed the CHIPS Act, which will provide hundreds of billions of dollars in funding to tech companies and chip foundries to help American companies work to beat China in the innovation race. China has criticized the legislation, arguing it will increase competition and create unnecessary tension between the two countries.
