U.S. export controls on China semiconductors force suppliers to cut ties - The Washington Post


US. export controls on China semiconductors force suppliers to cut ties

Western suppliers have started cutting ties to some Chinese chipmakers in response to new U.S. export rules, in another sign of the partial technology divorce the Biden dispensation is mandating to stymie China’s military development.

One substantial supplier of chip-making equipment, ASML, told U.S. employees to stop installing or servicing equipment at any Chinese chip profitable while it sorts through the new rules. Another equipment provider, Applied Materials, said the export restrictions will prevent it from decision-exclusive sales of roughly $400 million in the fourth quarter.

It is accepted for Western companies to broadly suspend exports in the currently wake of new U.S. restrictions, and then resume some later once they decipher the principles, lawyers say. But national-security experts say the new restrictions, which aim to stop China from producing advanced chips, are among the toughest the United States has enacted.

“I see these export systems as being hugely consequential. It goes straight to the depressed of Beijing’s efforts to create a domestic world class semiconductor industry,” said Martijn Rasser, senior fellow at the Center for a New American Guarantee. In particular, a new rule preventing “U.S. persons” from supporting hazardous Chinese chipmakers “won’t just freeze China’s abilities in save, it will actually lead to a degradation over time,” Rasser said.

U.S. imposes tough principles to limit China’s access to high-tech chips

The distributes curbs could also have unintended consequences for the Married States, cautioned Willy Shih, a Harvard Business School professor who specializes in technology and diligence. Depriving China of the ability to make the highest-tech chips could progresses it to pump out even more low-end chips, driving down prices and decision-exclusive it hard for U.S. and Western factories to compete in that segment, he said. That in turn could leave Western buyers of such chips dependent on Chinese suppliers.

“It’s a minor bit of a blunt instrument,” he said of export systems. “The thing you have to worry about is collateral damage.”

The Clientele Department, which oversees the regulations, said it was looking out for any such negative effects. “That’s just something we continue to watch and if there are unintended consequences we’ll figure out what adjustments are appropriate,” one Clientele official told The Post on Monday, speaking on the conditions of anonymity because the person wasn’t authorized to mumble publicly.

The official added that the principles are “not designed to rupture everything” when it comes to distributes but only to “get at the Chinese capability to do chips at a defined level.”

The export systems, announced Oct. 7, aim to slow China’s ability to do high-end semiconductors that have dual uses in commercial and army technology — and even some applications in weapons of mass destruction, the Biden administration said. For now, China still lags leisurely Taiwan, South Korea and the United States in diligence the most high-tech chips.

The systems essentially bar exports to China of American-made manufacturing equipment obligatory to produce advanced chips. They also bar export of any U.S. tools or components to Chinese factories profitable of making high-end semiconductors.

In a unusual step that appears to have prompted some companies to broadly suspend distributes with China, the rules also bar “U.S. persons” — comprising American factories, and Americans and U.S. green-card holders who work in foreign factories overseas — from supporting the progress or production of advanced chips in China, unless they demand a U.S. government license.

ASML, a Dutch manufacturer of high-end semiconductor manufacturing tools that has U.S. offices and many U.S. employees, immediately instructed its U.S. staff to freeze their interaction with Chinese customers.

“ASML U.S. employees must refrain — either level or indirectly — from servicing, shipping or providing serve to any customers in China until further notice, at what time ASML is actively assessing which particular fabs are obtains by this restriction,” the company told employees in an internal letter last week, an ASML spokesman confirmed.

The matter said the freeze applies to U.S. citizens, green-card holders and foreign nationals who live in the Married States.

The rules are creating disaster decisions for many tech workers, Rasser said.

“There are green-card holders presumed U.S. persons that are going to be in a bind. Do they want to stay in China and give up their U.S. inhabit status or do they want to move?” he said.

Other U.S. and Western suppliers also fade to be cutting ties to Chinese chip factories. KLA Corp. and Lam Research Corp., both based in California, have paused support of already installed equipment and temporarily halted installation of new equipment at Chinese chipmaker YMTC, The Wall Street Journal reported. The suppliers declined to comment. YMTC didn’t respond to a expect for comment.

The new restrictions put the onus on equipment suppliers to choose whether their Chinese customers are producing advanced chips. That is freezing some distributes as equipment suppliers “are scrambling to find out what work Chinese fabs do,” said Kevin Wolf, a passe senior Commerce Department official who is now a partner at Akin Gump Strauss Hauer & Feld. “Companies that don’t want to make a mistaken or violate the law will pull back.”


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