People knowing the matter said that the Biden government plans to widen curbs on United States semiconductor shipments to China by the end of October. In a letter sent earlier this year to three U.S. companies, including Applied Materials Inc, KLA Corporation, and Lam Research Corp, the Commerce Department intends to publish revised regulations based on the restrictions communicated in the letter.
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The plan for updated rules has not yet been reported. As a result of the letters, which the companies voluntarily acknowledged, the Chinese factories that make advanced semiconductors were prohibited from importing chipmaking equipment based on processes smaller than 14 nanometers unless they obtained licenses from the Department of Commerce.
Several restrictions in the proposed rules would also be codified based on letters sent by the Commerce Department to Nvidia Corporation and Advanced Micro Devices last month. They requested that they halt the shipment of several artificial intelligence computing chips to China unless licenses were obtained. Some sources said that the regulations might include further actions against Beijing. It is also possible that the restrictions will change, and the rules will not be published on time.
Regulations May Likely Target Companies Challenging Nvidia and AMD
Using “is informed” letters, the Commerce Department can bypass lengthy rule-writing procedures to implement controls more quickly. These letters are only applicable to firms that receive them. If the letters became regulations, the restrictions might be imposed on other U.S. companies that produce similar technologies. The regulations may impact companies seeking to challenge Nvidia’s and AMD’s dominance in the artificial intelligence chip market.
In the same way that Intel Corp targets advanced computing markets, startups such as Cerebras Systems do so. Cerebras declined to comment on the situation, while Intel is closely watching it. It has also been reported that the rules would impose licensing requirements on the shipments to China of products containing the targeted chips. In addition to Dell Technologies and Hewlett Packard Enterprise HPE, Super Micro Computer manufactures data center servers that include NVIDIA’s A100 chip.
Super Micro Computer refused a request for comment, and Dell and HPE indicated they were monitoring the situation. Despite declining to comment on the upcoming action, a Department of Commerce official said: “They strive to systematize any restrictions that are “in informed” letters through regulatory action.”
As part of its comprehensive approach to protecting U.S. national security and foreign policy interests, the Commerce Department declined to comment on specific regulations. Still, it maintained that it is “implementing additional actions…to prevent China from obtaining American military modernization technology.” Likewise, while AMD did not comment specifically on the policy move, the company reaffirmed that its new license requirement isn’t expected to have a “material impact.”
Point of No Return
As part of its efforts to thwart China’s advances, President Joe Biden’s administration targets technologies where the United States remains dominant. Jim Lewis, a technology expert at the Center for Strategic and International Studies, said, “The strategy is to choke off China, and chips are the choke point. They can’t make these things; they can’t manufacture them.” “But it is not for long.”
A U.S. business lobbying group, the Chamber of Commerce, warned members last week about impending restrictions on chipmaking tools and A.I. chips. “They have heard that members can expect another set of rules or maybe one overarching rule before the midterm election to classify the guidance in recent letters issued to chip equipment and chip design companies by the Commerce Department.
According to the group, a Chinese trade denylist will also be updated with more supercomputing entities from China. In July, Reuters reported that the Biden government was actively considering prohibiting exports of chipmaking tools to Chinese manufacturers that manufacture advanced semiconductors at fourteen nanometers and smaller. In addition, two sources claim that U.S. officials have approached allies about enacting similar policies to prevent foreign companies from selling technology to China that American companies would not be permitted to access.
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