The US has launched its third crackdown in three years on People’s Republic of China’s (PRC) semiconductor industry, introducing export curbs on 24 manufacturers and 140 firms.
The latest moves specifically target military applications but also cover semiconductor fabs and investment companies.
Gina Raimondo, US Secretary of Commerce, said, “This action is the culmination of the Biden-Harris Administration’s targeted approach, in concert with our allies and partners, to impair the PRC’s ability to indigenise the production of advanced technologies that pose a risk to our national security.”
“Further strengthening our export controls underscores the central role of the Department of Commerce in executing the US’ broader national security strategy.”
New controls are imposed on semiconductor manufacturing equipment needed to produce advanced-node integrated circuits, including certain etch, deposition, lithography, ion implantation, annealing, metrology and inspection, and cleaning tools, as well as three types of software tools for developing or producing semiconductors and controls on high-bandwidth memory.
The actions serve two primary objectives, according to the Bureau of Industry & Security; slowing the PRC’s development of advanced AI that has the potential to change the future of warfare; and impairing the PRC’s development of an indigenous semiconductor ecosystem.
The US, for a long time disadvantaged by foreign competitors who apply heavier subsidies, is on course to triple its semiconductor capacity by 2032, the largest projected growth globally.
Since the beginning of the Biden-Harris Administration – which introduced sweeping limits two years ago – semiconductor and electronics companies have announced over $400bn in private investments, catalysed in large part by public investment under the CHIPS & Science Act.
All eyes now turn to the new Republican administration. Semiconductors is a critical sector, positioned at the nexus of national security and economic policy.
In Trump’s infamous Joe Rogan interview on the campaign trail in October, he referred to the Act as “so bad” because it subsidises “rich companies”.
But the consensus seems to be that most of the $53bn Act will remain intact, not least because states earmarked to receive factories supported by it – such as Ohio, Texas and Arizona – all voted for Trump.
However some application guidelines, such as using 100% renewable energy, might be modified; and it is unclear whether courting leading Asian chipmakers such as TSMC – which continues to produce 95% of all chips – and Samsung, sits comfortably with Trump’s tariffs and onshoring, domestic-first agenda.
Chip prices across the global supply chain would rise in the event of a comprehensive tariff policy, and the US would still need to import most of the components needed for chip manufacturing anyway.
