Washington’s new restrictions on technology exports to China could undercut the country’s ability to develop wide swaths of its economy, from semiconductors and supercomputers to surveillance systems and advanced weapons.
The moves by US President Joe Biden’s administration are its most aggressive yet as it tries to stop China from developing technological capabilities it sees as a threat.
Depending on how broadly Washington enforces the restrictions, the effects could extend well beyond semiconductors and into industries that rely on high-end computing, from electric vehicles and aerospace to simple gadgets like smartphones.
Photo: Bloomberg
The two countries are officially in an “economic war,” SemiAnalysis chief analyst Dylan Patel said.
“This is the US salvo against China’s efforts to build its domestic tech capabilities,” said Patel, who estimates the restrictions could reduce global technology and industry trade by hundreds of billions of dollars. “It’s the US firing back, making clear they will fight back.”
US officials said the new restrictions are necessary to stop China from becoming more of an economic and military menace. They are seeking to ensure the country’s chipmakers do not secure the capability to make advanced semiconductors.
“The rules are a directional signal about US policy on China: a very hawkish consensus is now cemented in place,” Gavekal Dragonomics (龍洲經訊) technology analyst Dan Wang wrote.
“The reality is the US is determined to use chips as a tool to contain China,” Gu Wenjun (顧文君), head of Chinese chip researcher ICwise (芯謀研究), wrote in an online commentary. “There is no possibility of reconciliation.”
The new US regulations broadly limit chipmakers from selling to China artificial intelligence (AI) semiconductors and those that can be used for supercomputers.
Chipmakers can request an exception to the rules from the US Department of Commerce, but they should presume such requests would be denied, senior officials said.
The commerce department also put in place a raft of restrictions on supplying US machinery that is capable of making advanced semiconductors. It is targeting the types of memory and logic chips that are at the heart of state-of-the-art designs.
Specifically, the restrictions cover production of logic chips using so-called nonplanar transistors made with 16-nanometer technology or anything more advanced than that, 18-nanometer DRAM chips and NAND-style flash memory chips with 128 layers or more. Generally speaking, the smaller the number of nanometers, the more capable the chip.
Stacy Rasgon and a team from Sanford C. Bernstein said the restrictions on AI, supercomputers and advanced chip-making equipment, while pointing out that the standard CPUs used in PCs and servers would not be blocked from export to China, as some had feared.
“The changes represent a further escalation, and we do not know what China might do in response,” the Bernstein analysts wrote. “Potential retaliation remains a risk.”
Another question is how the US rules will affect the ability of companies such as ASML Holding NV to sell into China. The Dutch company is effectively the most important arms dealer for chipmakers around the world.
ASML has had to strike a challenging balance between the US and China. It has been selling its deep ultraviolet (DUV) machines to Chinese customers, but has held back from selling its more advanced extreme ultraviolet machines.
Under the new commerce department restrictions, the company might be limited from selling DUV technology to Chinese customers too, Citigroup Inc analysts wrote.
“We are assessing the potential implications of the new regulations, if any, and cannot comment at this moment,” ASML spokesperson Monique Mols said.
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