US unveils new package of chip export controls against China

Washington (The Uttam Hindu): The United States has announced a new semiconductor export control package against China, including curbs on high-end chips for artificial intelligence (AI) that are likely to affect the South Korean industry. The Commerce Department's Bureau of Industry and Security (BIS) unveiled the package on the Federal Register, including restrictions on exports of high bandwidth memory (HBM) chips. Two South Korean firms -- Samsung Electronics and SK hynix -- and Micron Technology lead the global HBM market.

The package comes as President Joe Biden is set to leave office on Jan. 20 with President-elect Donald Trump expected to adopt a tough policy stance on China. It is in line with Washington's efforts to limit China's access to key technologies on national security grounds, reports Yonhap news agency. "This action is the culmination of the Biden-Harris Administration's targeted approach, in concert with our allies and partners, to impair the PRC's ability to indigenize the production of advanced technologies that pose a risk to our national security," Secretary of Commerce Gina Raimondo said. PRC stands for China's official name, the People's Republic of China.

For the latest package, the BIS applied Foreign Direct Product Rules, under which a product, produced in a foreign country, is also subject to restrictions if it is made using U.S. technology, software or tools. The HBM curbs -- with a compliance date of December 31 -- target chips with a memory bandwidth density greater than 2 gigabytes per second per square millimeter, according to the BIS. The curbs could affect Samsung as it ships some of its HBM products to China, while little immediate impact is expected for SK hynix given that the company exports all of its HBM products to the United States, according to industry observers.

The BIS stressed the importance of curbs on HBM commodities for AI applications that it said can enable advanced military and intelligence applications, lower the barriers to entry for non-experts to develop weapons of mass destruction, support offensive cyber operations and assist in using mass surveillance to commit human rights abuses. The Commerce Department also announced new controls on 24 types of semiconductor manufacturing equipment (SME) and three types of software tools for developing or producing semiconductors as well as the addition of 140 entities -- linked to China's military modernisation -- to its "Entity List."

The department established new Foreign Direct Product controls for certain SME items that originate in foreign countries, but are produced with U.S. technology, software or tools -- a move that could affect Korean-made chipmaking equipment exports. Japan, the Netherlands and 31 other countries, which implement export controls equivalent to those of the U.S., are excluded from certain SME license requirements for exports, but South Korea is not among those countries.

Of the 140 entities added to the export control list, two are Korea-based companies -- ACM Research Korea Co. and Empyrean Korea. China's foreign ministry vowed to take "resolute measures" in response to the fresh export curbs. "We have repeatedly made clear our position on this issue. China firmly opposes the U.S.' overstretching the concept of national security, abusing export controls, and maliciously blocking and suppressing China," Lin Jian, the ministry's spokesperson, told a press briefing. "This type of behaviour seriously violates the laws of market economy and the principle of fair competition, disrupts international economic and trade order, destabilises global industrial and supply chains, and will eventually harm the interests of all countries," he added.