Several sources with knowledge of the topic indicated that the Biden administration intends to expand limitations on U.S. sales of semiconductors needed for artificial intelligence and chipmaking equipment to China next month.
Applied Materials Inc. (AMAT.O), Lam Research Corp. (LRCX.O), and KLA Corp. (KLAC.O), three U.S. companies, were informed of restrictions in letters earlier this year, the people said on the condition of anonymity. The Commerce Department intends to publish new regulations based on those restrictions. There hasn’t been a prior report on the new rule’s plan.
The businesses publicly acknowledged the letters, which forbade them from offering to sell chipmaking tools to Chinese producers of advanced semiconductors utilizing sub-14 nanometer technology unless the vendors got licenses from the Commerce Department.
The regulations would also formalize limits outlined in letters from the Commerce Department to Nvidia Corp. (NVDA.O) and Advanced Micro Devices (AMD.O) last month, ordering companies to stop shipping a number of artificial intelligence computing chips to China until they had obtained the necessary permits.
The regulations, according to some of the sources, would probably call for new sanctions on China. Additionally, the limitations might be altered, and the regulations could not be released as soon as anticipated.
The Commerce Department may swiftly implement regulations by using so-called “is informed” letters, which only apply to the businesses that receive them and allow it to avoid drawn-out rule-writing procedures.
The letters’ scope would be increased if they were made into regulations, and other American businesses making comparable technologies may be subject to them.
Businesses attempting to overthrow Nvidia and AMD’s monopoly on AI processors may be subject to the rules.
Startups like Cerebral Systems and Intel Corp (INTC.O) are vying for the same markets for advanced computing. While Cerebral declined to comment, Intel stated it was actively watching the issue.
According to one source, the regulations may also need licenses for items using the targeted chips being sent to China. Data center servers using the Nvidia A100 processor are manufactured by Dell Technologies (DELL.N), Hewlett Packard Enterprise (HPE.N), and Super Micro Computer (SMCI.O).
While Super Micro Computer declined to comment, Dell and HPE stated they were keeping an eye on the matter.
Despite declining to comment on the impending move, a senior Commerce official stated, “As a general rule, we attempt to codify any prohibitions that exist in is-informed letters with a regulation change.”
The Commerce Department declined to comment on specific limits on Friday but said that it is “pursuing a comprehensive plan to adopt more actions…to safeguard U.S. national security and foreign policy objectives,” including preventing China from acquiring American technology vital for military development.
In contrast to Lam, KLA, Applied Materials, and Nvidia all denied requests for comments. Although AMD said it does not expect the new license required to have a “significant impact,” it did not comment on the specific policy change.
‘POINT OF CHOICE’
The anticipated move coincides with efforts by President Joe Biden’s administration to halt Chinese advancements by focusing on industries where the United States still holds a dominant position.
The strategy to shut off China has discovered that chips are a key point. They cannot do this, they cannot produce the manufacturing machinery, “Jim Lewis, a specialist in technology at the Center for Strategic and International Studies, remarked that will alter.
The Chamber of Commerce, a U.S. industry lobbying organization, alerted members last week of impending limits on AI chips and chipmaking equipment in an update on China-related actions.
“We are now hearing that members could anticipate a series of regulations or even an overarching rule before the mid-term election to formalize the ideas in recently issued (Commerce Department) “is-informed” letters to semiconductor equipment and chip design firms,” the Chamber of Commerce stated.
Requests for a response from the Chinese embassy in Washington and the Chamber of Commerce were not immediately fulfilled.
The group added that the organization intends to add more Chinese supercomputing companies to a trade blacklist.
In July, the Biden administration was actively debating a prohibition on the sale of equipment used in chip manufacturing to Chinese facilities that produce sophisticated semiconductors at the 14-nanometer node and below.
In order to prevent foreign businesses from selling technology to China that American firms would be prohibited from shipping, U.S. officials have contacted allies to urge them to pass similar regulations, according to two of people.
Clete Willems, a former trade official in the Trump administration, stated that “coordination with friends is crucial to increasing efficacy and limiting unexpected repercussions.” Instead of one-off “is informed” letters, this should support more comprehensive laws that others can copy.