US export controls target Chinese tech sector

Imports and Exports | | MIC Customs Solutions |

Tough new export controls on shipments of US-made semiconductors to China have come into force.

A wide range of export controls on semiconductors has been announced by the US government that will add significant restrictions on shipments of computer chips to China.

The new rules - some of which come into effect immediately - cover semiconductor chips made anywhere in the world using US equipment and are intended to slow Beijing's technological and military progress, Reuters reports.

If effective, the restrictions could significantly impact China's chipmaking industry by requiring American companies to cut off support for some of the country's leading manufacturers. However, it would also stop overseas companies that use US technology from doing business with the nation.

In addition, the new rules prevent the export of semiconductors for use in Chinese supercomputers - defined by the US government as any system with more than 100 petaflops of computing power within a floor space of 6,400 square feet. Industry sources have suggested this description could include commercial data centers at some of China's largest tech companies.

Jim Lewis, a technology and cybersecurity expert at the Center for Strategic and International Studies, told Reuters the measures are reminiscent of the tough regulations imposed at the height of the Cold War and could set Chinese chipmaking back years. He added: "China isn't going to give up on chipmaking ... but this will really slow them (down)."

However, the new rules have already resulted in several unintended consequences, as the measures require firms trading with China to obtain licenses before any US exports can be shipped to facilities with advanced chip production. 

Reuters reports that this means even basic equipment such as light bulbs and bolts cannot be shipped until vendors secure the correct documentation, which could lead to supply chain disruptions.

To address this, the US government has therefore already begun granting exemptions to certain companies operating in the country - though not Chinese-owned firms. For example, South Korean chipmaker SK Hynix stated it has received authorization from the US to continue receiving goods for its chip production facilities in China without additional licensing.