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What are the Key Regulatory Changes by US in the Expanded Ban to China?

U.S. Department of Commerce recently unveiled an extensive set of rules and regulations designed to tighten export restrictions on advanced computing items. The primary objective? To prevent China from acquiring cutting-edge semiconductor technology.
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Introduction

In a move that underscores the evolving landscape of international relations and trade, the US Department of Commerce recently unveiled an extensive set of rules and regulations designed to tighten export restrictions on advanced computing items for China. The primary objective?

These extensive changes involve new parameters, adding China-based entities to the entity list, and expanding controls on semiconductor manufacturing equipment. This blog post delves into these regulations, their consequences, and how both the U.S. and China are reacting, revealing the intricate blend of global trade and national security.

The U.S. Department of Commerce has implemented new rules to restrict the export of advanced computing items. The goal is to impede China’s access to cutting-edge semiconductor technology. These changes, disclosed on October 17, 2023, tighten export controls in favor of national security. This blog post will analyze these rules, their impacts, and responses from the U.S. and China.

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Key Regulatory Changes by US for China

Parameter Modifications: The Department of Commerce’s Bureau of Industry and Security (BIS) has made notable adjustments to the parameters used to identify restricted chips. Interconnect bandwidth, previously a crucial criterion, has been removed. Instead, the BIS introduced a new parameter known as the “performance density threshold.” This parameter aims to address China’s growing interest in chiplet technology, a critical area of semiconductor development.

Entities Added to the Entity List: The U.S. government has added thirteen China-based entities to the entity list. These entities are mainly subsidiaries of Biren Technology and Moore Threads. The decision is based on the U.S. government’s belief that these companies are actively involved in developing advanced computing chips with potential national security applications, including advanced weapons, high-tech surveillance, and AI for potential weapons of mass destruction.

Expanded Restrictions on Semiconductor Manufacturing Equipment: The new rules also impose controls on additional types of semiconductor manufacturing equipment, including certain DUV lithography systems. These measures are designed to further restrict China’s access to critical technology.

Worldwide Licensing Requirement: The updated regulations introduce a global licensing requirement. It aims to stop companies outside China and Macau from getting chip shipments if their parent companies are based in nations the U.S. views as national security threats. This approach extends the reach of these export controls and prevents potential circumvention.

Read More: What is the Progress of Semiconductor Ecosystem in India in Last 2 years?

Rationale and Implications by US for China

The U.S. government’s motive for these changes is evident: safeguarding national security from the Chinese government’s military-civil fusion strategy. The focus is on actively controlling the export of advanced computing items, especially for military applications, to reduce the potential for technology to be used in the development of weapons and advanced surveillance systems.

These measures have immediate implications for several stakeholders:

Technology Companies: It’s important to note that companies like Nvidia, whose chips and systems the changes affect, will encounter new export restrictions.The affected product categories include ECCN 3A090 and 4A090, which include various Nvidia products.

Chinese Entities: The U.S. government has added thirteen China-based entities to the entity list, potentially impeding their ability to conduct business with U.S. companies or access sensitive technology.

Global Trade and Economic Framework: The U.S. has taken steps to ensure that these regulations have a global impact by imposing worldwide licensing requirements and expanding restrictions on semiconductor equipment to other countries with arms embargoes.

Read More: How Huawei Could be a Winner in US Ban of Nvidia GPUs?

China Response for US ban

The Chinese government strongly opposes these new export restrictions, characterizing them as arbitrary measures driven by political motives. China argues that these actions contradict the principles of a market economy, fair competition, and the global trade framework. China’s response underscores the trade tensions between these economic giants and the challenge of balancing national security with global economic interests.

Read More: China to Challenge ASML with a better technology than EUV

Conclusion

The U.S. Department of Commerce’s export restrictions respond to concerns about China’s semiconductor technology advancements and their potential national security implications. These measures highlight the intricate relationship between national security, trade, and global competition. It will be intriguing to see how these rules influence the semiconductor industry, trade dynamics, and the ongoing U.S.-China geopolitical rivalry.

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