WASHINGTON, Sept 11(Reuters) - The Biden administration
plans next month to broaden curbs on U.S shipments to China of
semiconductors used for artificial intelligence and chipmaking
tools, several people familiar with the matter said.
The Commerce Department intends to publish new regulations
based on restrictions communicated in letters earlier this year
to three U.S. companies -- KLA Corp, Lam Research Corp
and Applied Materials Inc, the people said,
speaking on the condition of anonymity.
The letters, which the companies publicly acknowledged,
forbade them from exporting chipmaking equipment to Chinese
factories that produce advanced semiconductors with sub-14
nanometer processes unless the sellers obtain Commerce
The rules would also codify restrictions in Commerce
Department letters sent to Nvidia Corp and Advanced
Micro Devices last month instructing them to halt
shipments of several artificial intelligence computing chips to
China unless they obtain licenses.
Some of the sources said the regulations would likely
include additional actions against China. The restrictions could
also be changed and the rules published later than expected.
So-called "is informed" letters allow the Commerce
Department to bypass lengthy rule-writing processes to put
controls in place quickly, but the letters only apply to the
companies that receive them.
Turning the letters into rules would broaden their reach and
could subject other U.S. companies producing similar technology
to the restrictions. The regulations could potentially apply to
companies trying to challenge Nvidia and AMD's dominance in
artificial intelligence chips.
Intel Corp and startups like Cerebras Systems are
targeting the same advanced computing markets. Intel said it is
closely monitoring the situation, while Cerebras declined to
One source said the rules could also impose license
requirements on shipments to China of products that contain the
targeted chips. Dell Technologies, Hewlett Packard
Enterprise and Super Micro Computer make data
center servers that contain Nvidia's A100 chip.
Dell and HPE said they were monitoring the situation, while
Super Micro Computer did not respond to a request for comment.
A senior Commerce official declined to comment on the
upcoming action, but said: "As a general rule, we look to codify
any restrictions that are in is-informed letters with a
A spokesperson for the Commerce Department on Friday
declined to comment on specific regulations but reiterated that
it is "taking a comprehensive approach to implement additional
actions...to protect U.S. national security and foreign policy
interests," including to keep China from acquiring U.S.
technology applicable to military modernization.
Liu Pengyu, a spokesperson for the Chinese Embassy in
Washington, said on Tuesday that China opposes the United
States'"abuse of export control measures to restrict the export
of semiconductor-related items to China." The upcoming
restrictions violate international trade rules, harm global
growth and hurt U.S. and Chinese companies, he said.
KLA, Applied Materials and Nvidia declined to comment while
Lam did not respond to requests for comment. AMD did not comment
on the specific policy move but reaffirmed it does not foresee a
"material impact" from its new licensing requirement.
The planned action comes as the President Joe Biden's
administration has sought to thwart China's advances by
targeting technologies where the United States still maintains
"The strategy is to choke off China and they have discovered
that chips are a choke point. They can't make this stuff, they
can't make the manufacturing equipment," said Jim Lewis a
technology expert at the Center for Strategic and International
Studies. "That will change."
In an update on China-related measures last week, the
Chamber of Commerce, a U.S. business lobbying group, warned
members of imminent restrictions on AI chips and chipmaking
"We are now hearing that members should expect a series of
rules or perhaps an overarching rule prior to the mid-term
election to codify the guidance in recently issued (Commerce
Department) 'is-informed' letters to chip equipment and chip
design companies," the chamber said.
The group also said the agency plans to add additional
Chinese supercomputing entities to a trade blacklist.
Reuters was first to report in July that the Biden
administration was actively discussing banning exports of
chipmaking tools to Chinese factories that make advanced
semiconductors at the 14 nanometer node and smaller. Tech news
outlet Protocol reported plans to turn the letters sent to
toolmakers into a regulation last month. Other elements of the
rules, including the curbs on AI chip exports and the October
release date, were first reported by Reuters.
U.S. officials have reached out to allies to lobby them to
enact similar policies so that foreign companies would not be
able to sell technology to China that American firms would be
barred from shipping, two of the sources said.
Coordination with allies is key to maximizing effectiveness
and minimizing unintended consequences," Clete Willems, a former
Trump administration trade official said. "This should favor
broader regulations that others can replicate instead of one-off
'is informed' letters."
(Reporting by Karen Freifeld and Alexandra Alper; Additional
Reporting by Stephen Nellis and Jane Lanhee Lee; Editing by
Chris Sanders and Cynthia Osterman)