The United States has introduced a new package of semiconductor export controls targeting China, focusing on high-end chips used in artificial intelligence (AI) and advanced technologies. The restrictions, announced by the Commerce Department’s Bureau of Industry and Security (BIS), include curbs on exporting high-bandwidth memory (HBM) chips, a critical component in AI applications.

Leading players in the global HBM market, such as South Korea's Samsung Electronics and SK Hynix, along with the U.S.-based Micron Technology, are expected to be impacted by these measures.

Commerce Secretary Gina Raimondo said, “This action is part of the Biden-Harris Administration's strategy, working with allies, to prevent China from advancing in technologies that could threaten U.S. national security.”

The BIS invoked the Foreign Direct Product Rules, which restrict products made abroad using U.S. technology, software, or tools. The new regulations apply to HBM chips with a memory bandwidth density exceeding 2 gigabytes per second per square millimeter, effective from December 31.

Impact on Industry
Samsung, which exports some HBM products to China, may face challenges, while SK Hynix is expected to see minimal impact as its HBM exports are directed to the U.S., according to industry experts.

The BIS emphasized the need for such controls, noting that these AI-related chips could enhance military and intelligence capabilities, facilitate the development of weapons of mass destruction, and enable mass surveillance technologies used for human rights abuses.

In addition to the HBM chip restrictions, the U.S. has imposed controls on 24 types of semiconductor manufacturing equipment (SME) and three types of software tools used in chip production. Furthermore, 140 entities linked to China's military modernization have been added to the "Entity List," restricting their access to critical technologies.

International Collaboration and Exemptions
Countries like Japan and the Netherlands, which align with U.S. export control standards, are exempt from certain SME licensing requirements. However, South Korea is not included in this exemption list, potentially affecting Korean-made semiconductor equipment exports.

Among the 140 entities newly listed, two are based in South Korea: ACM Research Korea Co. and Empyrean Korea.

China's Response
China’s foreign ministry strongly opposed the new export curbs. Ministry spokesperson Lin Jian said, “China firmly opposes the U.S.’s misuse of national security concerns to suppress and block Chinese companies.” He added that such actions disrupt global trade and industrial supply chains, ultimately harming all countries involved.

US Sanctions Pose Challenges to China’s Chip Manufacturing Ambitions

Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation, said the latest U.S. sanctions could significantly hinder China's efforts to establish a world-class domestic semiconductor industry.

In an email exchange, Ezell explained that producing semiconductors is "one of the most complex engineering challenges humanity undertakes." He emphasized that building the machinery required for chip manufacturing demands an extensive range of components, many of which are accessible only through global supply chains that the U.S. can effectively limit.

“These tools rely on tens of thousands of inputs and components sourced from specialized suppliers worldwide,” Ezell said. “Without access to these resources, Chinese manufacturers face increased difficulty and higher costs in developing a fully independent supply chain.”

Impact on U.S. and Global Markets
Ezell acknowledged that restricting sales to China could harm U.S. manufacturers who lose market share in the country. However, he pointed out that China has long sought to reduce its reliance on foreign chips, which would have led to a similar outcome over time.

He proposed that the U.S. and its allies invest in growing semiconductor industries in countries like India and Malaysia. “By expanding semiconductor production in like-minded nations, we can recapture sales lost in China and bolster global supply chains,” he said.

Ezell also stressed the importance of aligning with other major semiconductor-producing countries to implement coordinated policies aimed at limiting China’s access to advanced technologies.

Focus on Advanced Chips
The new U.S. export controls specifically target "advanced node" chips and the equipment used to produce them. These chips are characterized by their ultra-small transistors, some measuring as little as three nanometers, enabling higher processing power and energy efficiency.

To maximize performance, advanced node chips require pairing with high-bandwidth computer memory, allowing rapid access to vast amounts of data.

The U.S. measures aim to curb China's ability to produce and utilize these advanced technologies, reinforcing global competition in the semiconductor industry.

Tags: US-China trade, semiconductor sanctions, advanced chips, technology export controls, semiconductor manufacturing, global innovation policy, high-bandwidth memory, supply chain challenges, US-China tech war, semiconductor equipment restrictions.

The latest move underscores escalating tensions between the U.S. and China as both nations vie for dominance in advanced technology sectors.

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