The outgoing Biden administration in the US has announced a third wave of export controls on microchip technology heading to China.
These export controls, which first materialised with bipartisan support in 2022, restrict companies like Nvidia Corp and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD) from exporting their most cutting-edge artificial intelligence chips to China.
US secretary of commerce Gina Raimondo called the latest measures “groundbreaking and sweeping” in a press statement.
“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,” she said in a statement.
“No administration has been tougher in strategically addressing China’s military modernization through export controls,” Raimonda added.
US lawmakers fear that this technology will be used to create military-grade AI applications.
The latest tranche of restrictions broadened the scope to include high bandwidth memory (HBM) technology used in AI applications.
140 Chinese companies have also been added to the blacklist, although they weren’t specifically mentioned.
Since 2022, Huawei has been the primary target of export controls due to the tech giant’s close links with the ruling PRC party.
Controversially, the US has also sought to ban non-US companies from exporting their technology under the foreign direct product rule (FDPR).
Under the FDPR, the US contends that any company using US components in their manufacturing process must abide by US-led export controls.
This has directly impacted Dutch lithography manufacturer ASML Holding NV (NASDAQ:ASML), which has a global monopoly on the printing equipment used to make AI chips.
However, reports suggest the US is considering exemptions for allies, including Japan and the Netherlands.
Despite their deep animosity, president-elect Donald Trump is expected to retain the export controls when he takes office next month.
“The one thing that Joe Biden and Donald Trump seem to agree on is a desire to stop China using Western technology to strengthen its military capabilities,” said Dan Coatsworth, investment analyst at AJ Bell.
“Trump is expected to keep the export restrictions in place when he returns to the White House in January, but he will want to put his own mark on the initiatives by potentially tightening the rules even further.
“It suggests a more complicated backdrop for the likes of US chip equipment manufacturers Applied Materials, KLA and Lam Research.”