The Biden administration is considering additional measures on the sale of semiconductor equipment and AI memory chips to China that would increase U.S. pressure on Beijing’s technology interests but leave behind some of the tougher measures previously considered, according to people familiar with the matter.
The bans could be unveiled next week, said the people, who emphasized that the timing and form of the rules have changed several times, and nothing is final until they are published. This follows months of negotiations by US officials, talks with allies in Japan and the Netherlands, and intense pressure from American equipment manufacturers who have warned that tougher action could cause serious damage to their business.
The latest proposals have significant differences from earlier documents, the people said. The first is that Chinese companies that the US can add to the trade embargo list. The U.S. has already considered six people at Huawei Technologies Co — the telecoms giant at the heart of China’s tech industry — and officials are aware of about half as many, the people said. But now they plan to add some of Huawei’s suppliers to the list of organizations, and known failure of ChangXin Memory Technologies Inc., which is trying to develop AI memory chip technology.
Spokesmen for the Commerce Department of Industry and Security declined to comment. A spokesman for the National Security Council referred Bloomberg News to BIS.
Japanese chips jumped. Tokyo Electron Ltd. it rose as much as 10%, posting losses in early trading. Kokusai Electric Corp. rose 23%, and Screen Holdings Co. it also gained about 10%.
The proposed regulations would also allow two chip factories owned by Semiconductor Manufacturing International Corp., a partner of Huawei’s chip maker, the people said. The more than 100 listings focus on Chinese companies that make semiconductor equipment, the people said, rather than equipment manufacturers that make chips themselves. Wired He previously said that the US could come up with new export regulations next Monday.
It is a small victory for American chip makers – Lam Research Corp., Applied Materials Inc. and KLA Corp. – who have been arguing for months against US sanctions on major Chinese companies, including six Huawei suppliers. They have argued that such sanctions would put them at an unfair disadvantage compared to foreign rivals Tokyo Electron and Dutch arms giant ASML Holding NV, whose governments have yet to agree on restrictions on sales to China. Japan and the Netherlands have pushed for some Chinese policies to be more closely aligned with the U.S. starting in 2022, but both countries have resisted America’s latest push for stronger governance.
American officials this summer tried a tougher communication strategy with their allies warning that the US may ban directly the sale of Chinese companies to foreign companies, a move that Japan and the Netherlands saw as a major takeover. The US hope was that the threat of using the so-called foreign direct rule, or FDPR, would force allies to impose their own measures. But Tokyo and The Hague have shown little interest in cooperating with the Biden administration ahead of President-elect Donald Trump’s arrival.
The new US law, which also bans other weapons, would remain in place non-aligned partners including Japan and the Netherlands from FPPR, people familiar with the matter said. It is unclear whether Japan or the Netherlands will eventually impose additional sanctions on Chinese companies that the US wants to punish.
The latest version of the US regulations may also include provisions around higher bandwidth, which preserves data storage and is essential for artificial intelligence. Samsung Electronics Co. and SK Hynix Inc. along with American memory maker Micron Technology Inc. are expected to be affected by the new measures, the people said.
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