The Biden administration intends to broaden curbs on American shipments of semiconductors used in chip manufacturing and artificial intelligence to China starting next month.
Officials, who spoke on the condition of anonymity, revealed that the Commerce Department plans to publish proposed rules based on restrictions conveyed in letters to three American companies earlier this year: Lam Research Corp (LRCX.O), KLA Corp (KLAC.O), as well as Applied Materials Inc (AMAT.O). There hasn’t been any prior information about the proposed new rules.
The letters, which the firms publicly acknowledged, barred them from selling chipmaking gear to Chinese manufacturers that produce sophisticated semiconductors using sub-14 nanometer complex processes unless the vendors receive Commerce Department permits.
The rules would also codify limits in Commerce Department letters delivered to Nvidia Corp (NVDA.O) & Advanced Micro Devices (AMD.O) last month asking companies to halt sales of several artificial intelligence computation chips to China unless they receive licenses.
Some of the source materials said the restrictions would likely include extra measures against China. The limitations could also be changed, and the rules available later than expected.
The Commerce Department can quickly implement controls by avoiding drawn-out rule-writing procedures by using so-called “is informed” letters, although these letters only apply to the corporations who get them.
Turning the letters into guidelines would widen their reach and might subject more U.S. companies developing identical technology to the limitations. Companies attempting to compete with Nvidia and AMD’s hegemony in artificial intelligence chips may be subject to the regulations.
The same markets for sophisticated computing are being pursued by companies like Cerebras Systems and Intel Corp (INTC.O). Intel said it is constantly watching the situation, while Cerebras refused to comment.
According to one source, the regulations may also impose license requirements on the exportation of goods containing the targeted chips to China. The Nvidia A100 chip is found in data centre servers made by Hewlett Packard Enterprise (HPE.N), Dell Technologies (DELL.N), and Super Micro Computer (SMCI.O).
Super Micro Computer did not react to a request for comment, while Dell and HPE stated that they were keeping an eye on the matter.
Despite declining to comment on the impending action, a senior Commerce official stated that generally speaking, they want to codify any limits that are in is-informed memos with a regulation change.
On Friday, a representative for the Commerce Department declined to comment on stringent guidelines but reaffirmed that the department is adopting a comprehensive strategy to put additional measures into place to safeguard U.S. national security as well as foreign policy interests, including preventing China from acquiring American technology useful for military modernization.
While Lam did not reply to requests for comment, KLA, Applied Materials, and Nvidia did. Although AMD reiterated it does not anticipate a “significant impact” from its new licencing requirement, it did not comment on the precise policy change.
The anticipated action coincides with efforts by President Joe Biden’s team to halt Chinese advancements by focusing on industries where the United States still holds a dominant position.
They have found that chips constitute a choke point in their plan to cut off China. Jim Lewis, a technology specialist at the Center for Strategic & International Studies, claimed that they are unable to produce either the goods themselves or the production machinery.
The Chamber of Commerce, a U.S. industry lobbying group, alerted members last week of impending limits on AI chips and chipmaking equipment in an update on China-related actions.
The chamber stated that members should anticipate a set of regulations or possibly a single, overarching regulation to codify the instructions in recently published Commerce Department “is-informed” letters to chip gear and chip design firms before the mid-term election.
Additionally, the group said the organisation intended to expand the trade blacklist of Chinese supercomputing companies.
It is well known that the Biden office had been aggressively debating a restriction on the export of equipment used in chip manufacturing to Chinese plants that produce cutting-edge semiconductors of the 14-nanometer node and below.