The US Department of Commerce announced its most extensive restrictions on semiconductor exports to China on Monday, aiming to limit China's ability to produce AI chips domestically.
The new regulations block access to 24 types of chip manufacturing equipment and three software programs. “They're the strongest controls ever enacted by the US to degrade the PRC’s ability to make the most advanced chips that they're using in their military modernization,” US Commerce Secretary Gina Raimondo told reporters.
A major change affects the "Foreign Direct Product Rule" (FDP): The previous 25 percent threshold for US components in foreign chip production facilities will no longer apply. Going forward, all systems containing US technology will fall under export restrictions, regardless of the percentage.
Experts expect serious consequences
According to semiconductor publication Semianalysis, removing this threshold could severely impact Chinese chip factories. US authorities could immediately halt the expansion of Chinese production capacity. Existing facilities could face major restrictions or become inoperable within six months.
The Commerce Department added 140 Chinese companies to its sanctions list, including tool manufacturers, chip factories, and investment firms. These companies now need special licenses to obtain US software or products.
The US is also addressing existing workarounds. Chinese manufacturer SMIC had previously bypassed sanctions using a "wafer bridge" between its sanctioned high-end production and a non-sanctioned legacy facility. The new regulations include "red flag" guidelines to help companies spot such attempts.
China's Foreign Ministry spokeswoman Mao Ning said the US was "overstretching the concept of national security" and disrupting the international economic order.
The US Department of Commerce also recently ordered Taiwanese chip manufacturer TSMC to stop providing advanced chips to Chinese customers.
