WASHINGTON, Sept 11 (Reuters) – The Biden administration plans next month to expand restrictions on U.S. shipments to China of semiconductors used in artificial intelligence and chip-making tools, several people familiar with the matter said. The Commerce Department plans to publish new regulations based on restrictions communicated in letters earlier this year to three U.S. companies — KLA Corp ( KLAC.O ), Lam Research Corp ( LRCX.O ) and Applied Materials Inc ( AMAT.O ). the people said, speaking on condition of anonymity. The plan for new rules has not been previously reported. The letters, which the companies publicly acknowledged, prohibited them from exporting chip-making equipment to Chinese factories that produce advanced semiconductors with processes below 14 nanometers unless the sellers obtain Commerce Department permits. Sign up now for FREE unlimited access to Reuters.comSign up The rules will also codify restrictions on Commerce Department letters sent to Nvidia Corp ( NVDA.O ) and Advanced Micro Devices ( AMD.O ) last month ordering them to stop shipments of several artificial intelligence computing chips to China, unless they obtain licenses. read more Some of the sources said the regulations would likely include additional actions against China. Restrictions could also change and rules could be published later than expected. So-called “be aware” letters allow the Commerce Department to bypass lengthy rulemaking processes to quickly put controls in place, but the letters apply only to the companies that receive them. Turning the letters into rules would broaden their reach and could subject other US companies producing similar technology to the restrictions. The regulations could potentially apply to companies trying to challenge Nvidia and AMD’s dominance in artificial intelligence chips. Intel Corp ( INTC.O ) and startups such as Cerebras Systems are targeting the same high-end computing markets. Intel said it was closely monitoring the situation, while Cerebras declined to comment. One source said the rules could also impose licensing requirements for shipments to China of products containing the targeted chips. Dell Technologies ( DELL.N ), Hewlett Packard Enterprise ( HPE.N ) and Super Micro Computer ( SMCI.O ) make data center servers that contain Nvidia’s A100 chip. Dell and HPE said they were monitoring the situation, while Super Micro Computer did not respond to a request for comment. A senior Commerce official declined to comment on the upcoming action, but said: “As a general rule, we try to codify any restrictions mentioned in update letters with a regulatory change.” Semiconductor chips are seen on a computer circuit board in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo A Commerce Department spokesman on Friday declined to comment on specific regulations, but reiterated that it is “taking a comprehensive approach to implementing additional actions … to protect US national security and foreign policy interests,” including preventing China from acquire American technology applicable to military modernization. KLA, Applied Materials and Nvidia declined to comment, while Lam did not respond to requests for comment. AMD did not comment on the specific policy move, but confirmed that it does not foresee a “material impact” from the new licensing requirement.
‘SPIRIT POINT’
The planned action comes as President Joe Biden’s administration has sought to block China’s advances by targeting technologies where the United States still dominates. “The strategy is to choke China, and they’ve found that chips are a choke point. They can’t make that hardware, they can’t make the manufacturing equipment,” said Jim Lewis, a technology expert at the Center for Strategy and International Studies. “That will change.” In an update on China-related measures last week, the Chamber of Commerce, a US business lobby group, warned members of impending restrictions on artificial intelligence chips and chip-making tools. “We are now hearing that members will have to wait for a set of rules or perhaps a blanket rule before the midterm elections to codify the guidance in recently issued letters (updated by the Commerce Department) to chip equipment and chip design companies. said the hall. The group also said the agency plans to add additional Chinese supercomputer entities to a trade blacklist. Reuters first reported in July that the Biden administration was actively discussing a ban on exports of chipmaking tools to Chinese factories that make advanced semiconductors at the 14-nanometer node and smaller. read more U.S. officials have reached out to allies to pressure them to enact similar policies so that foreign companies cannot sell technology to China that U.S. companies would be barred from shipping, two of the sources said. “Coordination with allies is key to maximizing effectiveness and minimizing unintended consequences,” said Clete Willems, a former trade official in the Trump administration. “This will favor broader regulations that others can replicate rather than one-off ‘know-what’ letters. Sign up now for FREE unlimited access to Reuters.comSign up Reporting by Karen Freifeld and Alexandra Alper. Additional reporting by Stephen Nellis and Jane Lanhee Lee. Edited by Chris Sanders and Cynthia Osterman Our Standards: The Thomson Reuters Trust Principles.
