U.S. aims to hobble China’s chip industry with sweeping new export rules

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U.S. aims to hobble China’s chip industry with sweeping new export rules
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The raft of measures could amount to the biggest shift in U.S. policy toward shipping technology to China since the 1990s

. If effective, they could hobble China’s chip manufacturing industry by forcing American and foreign companies that use U.S. technology to cut off support for some of China’s leading factories and chip designers.

The expansion of U.S. powers to control exports to China of chips made with U.S. tools is based on a broadening of the so-called foreign direct product rule. It was previously expanded to give the U.S. government authority to control exports of chips made overseas to Chinese telecoms giant Huawei Technologies Co Ltd and later to stop the flow of semiconductors to Russia after its invasion of Ukraine.

Eric Sayers, a defence policy expert at the American Enterprise Institute, said the move reflects a new bid by the Biden administration to contain China’s advances instead of simply seeking to level the playing field. The Semiconductor Industry Association, which represents chip makers, said it was studying the regulations and urged the United States to “implement the rules in a targeted way - and in collaboration with international partners - to help level the playing field.”

Under a new policy announced on Friday, if a government prevents U.S. officials from conducting site checks at companies placed on the unverified list, U.S. authorities will start the process for adding them to the entity list after 60 days. Reuters was first to report key details of the new curbs on memory chip makers, including a reprieve for foreign companies operating in China and the moves to broaden restrictions on shipments to China of technologies from KLA, Lam, Applied Materials, Nvidia and AMD.

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