President Biden toured an IBM facility in New York on Thursday. Democrats have cheered announcements of new investments in domestic manufacturing after Congress approved some $50 billion in subsidies for expanding the semiconductor industry.
WASHINGTON—The U.S. imposed new export restrictions on advanced semiconductors and chip-manufacturing equipment in an effort to prevent American technology from advancing China’s military power.
The rules will require U.S. chip makers to obtain a license from the Commerce Department to export certain chips used in advanced artificial-intelligence calculations and supercomputing—crucial technologies for modern weapons systems, senior administration officials said.
The U.S. already requires licenses for exports of many advanced technologies to Chinese entities deemed to be working against U.S. national security interests.
Friday’s move expands that to include exports of crucial cutting-edge chips and equipment that can’t be obtained elsewhere. The rules will also allow the U.S. to block foreign-made chips that are manufactured with U.S. technology, the officials said.
The restrictions are some of the broadest the U.S. has ever enacted against China’s chip industry, veering from previous actions that often targeted individual companies and a narrower subset of technology.
Officials described them as necessary to keep China from building up its military, developing new, state-of-the-art weaponry and further enhancing its surveillance network, already one of the world’s most sophisticated.
“We believe certain advanced computing capabilities which rely on U.S. chips, software, tooling and technology are fueling the [Chinese] military modernization, including the development of weapons of mass destruction,” a senior administration official said.
“These capabilities are also used in other activities of serious concern, including largescale surveillance activities enabling human-rights violations and abuses.”
Allowing China and its military access to the most advanced chips and chip-making equipment “poses profound national security risks,” the official said.
The Semiconductor Industry Association said it was assessing the impact of the new rules. “We understand the goal of ensuring national security,” the trade group said, but added that it hoped the rules could be implemented in a way that wouldn’t result in “unintended harm to U.S. innovation.”
Rep. Michael McCaul (R., Texas), the top Republican on the House Foreign Affairs Committee, said the new rules were a positive step, but that strict enforcement of them will be crucial.
“Lax licensing standards would undermine the intent of what these rules aim to achieve,” he said.
The new restrictions also include a restriction on chipmaking machinery capable of making some of the most advanced number-crunching chips as well as computer memory and data-storage chips, the officials said.
Further controls are being placed on items China could use to develop its own manufacturing equipment industry, they said.
The semiconductor industry was born in the U.S. but has shifted outside the country in recent decades, mostly to Taiwan, South Korea and China, a state of affairs U.S. officials and legislators see as a worrying national security vulnerability.
Sarah Kreps, who leads Cornell University’s Tech Policy Lab, cautioned that the U.S. action could be for naught unless it can convince other nations to also deny China advanced technology.
“If not, East Asian allies like South Korea and Taiwan, which are significant manufacturers of these components, will continue to export to China,” she said. “In which case, U.S. firms will lose market share and China will find a bypass to the U.S. restrictions.”
Advanced chips are increasingly a pillar of geopolitical power, underpinning both military systems and data-processing capabilities that drive modern economies. The U.S. is working to get allies on board with the restrictions and enact similar ones themselves.
The rules appeared to carve out at least one concession to some of those allies. While license applications would be subject to a presumption of denial, the Commerce Department would review applications for certain exports to U.S. and U.S.-allied facilities operating in China, a senior official said.
Chip makers based in South Korea and Taiwan operate large factories in China, and could see those businesses disrupted if U.S. restrictions cover all facilities in China.
In addition to the controls on chips and chip equipment, the Commerce Department is adding restrictions on U.S. citizens, permanent residents and companies providing support to some Chinese chip-making facilities, and expanding restrictions on 28 Chinese entities already on the department’s export blacklist that are involved in the country’s supercomputing industry, an administration official said.
The controls were announced as the administration has sought to burnish its record on technology and national security ahead of the midterm elections. Congress this year approved more than $50 billion in subsidies for expanding the domestic semiconductor industry, part of a broader effort to secure domestic supply chains and keep the U.S. ahead of China on cutting-edge tech.
In the wake of the legislation, Democrats have cheered announcements of new investments in domestic manufacturing by the likes of Micron Technology Inc. President Biden traveled to New York on Thursday to tout new investments by International Business Machines Corp.
The Chinese Embassy in Washington criticized the latest regulatory moves based on preliminary reports, saying they are aimed at holding back emerging economies such as China. “What the U.S. is doing is purely ‘sci-tech hegemony,’ ” said spokesman Liu Pengyu.
