The United States has unveiled a new set of stringent export controls aimed at stifling China’s progress in developing an advanced semiconductor industry and artificial intelligence (AI) technologies with military applications. These measures, described as “groundbreaking and sweeping” by US Commerce Secretary Gina Raimondo, mark the most robust effort yet by Washington to impede Beijing’s technological ambitions, according to The Financial Times.
The controls target critical manufacturing tools and restrict the export of advanced high bandwidth memory (HBM), an essential component in AI chips. The restrictions are not limited to US companies but also extend to foreign firms using American technology in their equipment. Raimondo emphasized the significance of these measures, stating, “They’re the strongest controls ever enacted by the US to degrade the People’s Republic of China’s ability to make the most advanced chips that they’re using in their military modernisation.”
Expanding the Entity List and Extraterritorial Reach
The Commerce Department plans to add 140 Chinese companies to its “entity list,” a blacklist that effectively blocks access to US technology by requiring export licenses that are nearly impossible to obtain. The listed entities include Semiconductor Manufacturing International Corporation (SMIC) and Huawei, as well as other Chinese firms producing chipmaking equipment.
To enhance the effectiveness of these measures, the US will invoke the Foreign Direct Product Rule (FDPR), which applies to non-US companies incorporating American technology in their tools. While Japan and some European allies, including the Netherlands, have secured exemptions after agreeing to impose similar restrictions, South Korea has not yet reached an agreement.
Challenges and Criticisms
Despite the comprehensive nature of the controls, experts have raised concerns about potential loopholes. Meghan Harris, an export control expert at Beacon Global Strategies, noted that targeting China’s domestic toolmaking industry is critical. “Trying to impede China’s advanced semiconductor industry without addressing their accelerating domestic toolmaking capabilities is like trying to prevent a fisherman from catching bigger fish simply by denying him bigger fishing poles. He’ll get there in the end,” she said.
Gregory Allen, an AI expert at the Center for Strategic and International Studies (CSIS), pointed out inconsistencies in the policy. He highlighted a “bizarre contradiction” where FDPR is significantly expanded, yet certain Chinese firms and shell companies linked to Huawei and SMIC are not fully covered. Questions have also been raised about why CXMT, a key Chinese producer of HBM, was not added to the entity list despite its relevance to China’s AI ambitions.
Balancing Strategy with Allied Cooperation
Internal debates within the US administration have shaped the final policy. While some officials pushed for tougher measures against Huawei, others advocated for compromises to ensure cooperation from allied nations on chip-related restrictions. Raimondo emphasized the necessity of such alliances, stating that collaborative efforts with Japan, Europe, and others are integral to the strategy.
