America extends China chip export bans and acts to cut off backdoor exports

Chips cunningly designed to be less powerful and evade sanctions look to be in trouble

The US Department of Commerce has extended sanctions against China – and now other countries – in its bid to block advanced semiconductors making it to the Middle Kingdom.

On Tuesday the updated list [PDF] of economic measures from the Department’s Bureau of Industry and Security (BIS) bans even more advanced chips and the sale of advanced chip-making equipment to China. But it also extends the restrictions to 40-plus countries that are considered at high risk of buying up advanced tech and then reselling the kit to China.

“Today’s updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions. These controls maintain our clear focus on military applications and confront the threats to our national security posed by the PRC Government’s military-civil fusion strategy,” said Secretary of Commerce Gina Raimondo.

“As we implement these restrictions, we will keep working to protect our national security by restricting access to critical technologies, vigilantly enforcing our rules, while minimizing any unintended impact on trade flows.”

Under the last two presidents the US has steadily added to the list of processor technology barred from sale to China - with mixed results. So if at first you don't succeed, try and try again seems to be the thinking.

The previous set of restrictions, introduced in September 2022, set strict controls on the power of processors that could be sold to China. Nvidia promptly released the A800, a chip scaled back to comply with the rules. Intel and TSMC did likewise. All three chipmakers received huge orders from China.

These manufacturers could now be in trouble as the lesser kit designed to sell in China will soon be ineligible for exports under the rules which come into effect in 30 days. Nvidia's share price dropped around five percent after Tuesday's announcement and in a filing the chipmaker told investors its A100, A800, H100, H800, L40, L40S, and RTX 4090 products are likely to be affected.

"We have made our position clear on US restrictions of chip exports to China," said China's Foreign Ministry spokesperson Mao Ning at a press conference on Monday.

"The US needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chains. We will closely follow the developments and firmly safeguard our rights and interests."

China isn’t alone in being unhappy about the revised rule. The Semiconductor Industry Association, which represents many of the world's chipmakers, worried its members may be harmed.

"We recognize the need to protect national security and believe maintaining a healthy US semiconductor industry is an essential component to achieving that goal," reads a statement by the Association.

"Overly broad, unilateral controls risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere. Accordingly, we urge the administration to strengthen coordination with allies to ensure a level playing field for all companies." ®

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