Biden Administration’s Battle Over Semiconductor Restrictions on China
The Biden administration is grappling with significant resistance from allied nations and the technology sector as it prepares to implement expanded restrictions aimed at curbing China’s capability to produce the most advanced semiconductors. These chips are crucial as they could potentially enhance Beijing’s military strength.
According to sources familiar with a draft version of the regulations, the administration has outlined new rules that would restrict shipments to China of machinery and software essential for semiconductor manufacturing. This would apply to equipment that incorporates American components or technology, along with certain categories of semiconductors.
The primary goal of these regulations is to close off emerging avenues that Chinese chipmakers have discovered to bypass existing technology acquisition restrictions. The United States has actively engaged with allies, including Japan and the Netherlands, urging them to strengthen their own limitations on technology exports to China. This diplomatic effort has involved high-level visits to these countries, including a significant state visit from Japanese officials to Washington in April.
Both Japan and the Netherlands host leading companies that manufacture chip-making machinery, such as ASML Holding N.V. and Tokyo Electron Limited. However, there is growing concern within the tech industry in the U.S. and beyond that these new rules could adversely affect their operations. As a result, uncertainty looms over when or if these foreign governments will implement similar restrictions.
In the interim, the restrictions that the United States intends to impose are expected to include substantial exemptions. Reports indicate that the rules prohibiting the export of equipment to specific semiconductor facilities in China would not apply to more than 30 allied nations, which encompass key players like the Netherlands, South Korea, and Japan.
This situation has led to significant backlash from U.S. firms, who argue that if the U.S. government enforces these restrictions on their sales while allowing competitors in those exempt nations to continue their exports, it could create an uneven playing field, further disadvantaging American companies in the global market.
