The U.S. government is set to introduce a new rule expanding U.S. restrictions on exporting semiconductor manufacturing equipment to Chinese chipmakers. It will also expand the Entity List with 120 China-based entities to close loops that enable Chinese fabs to obtain advanced chipmaking tools featuring American technologies, Reuters reports. But companies from key allies like Japan, the Netherlands, and South Korea will get exemptions.
The forthcoming rule will affect roughly six facilities in China. The affected companies include various chip manufacturing plants, toolmakers, and companies involved in electronic design automation (EDA) software. The moves aim to further restrict China's access to advanced technology necessary for the advancement of its semiconductor industry.
This new regulation is an extension of the existing Foreign Direct Product Rule (FDPR), which allows the U.S. to control the sale of products made with American technology, even if manufactured abroad. As part of the new rule, the U.S. government also plans to tighten control by reducing the amount of U.S. content needed in foreign-made items to be subject to U.S. export restrictions. This adjustment will close a loophole that previously allowed certain products to bypass these controls.
The new measures will prevent countries like Israel, Taiwan, Singapore, and Malaysia from exporting relevant equipment to these Chinese entities, as Tom's Hardware reported two weeks ago. However, the exclusions for Japan, the Netherlands, and South Korea mean that companies like ASML and Tokyo Electron will not be impacted. There is a catch, however: FDPR gives the U.S. government some additional instruments to impose restrictions, so it is possible that not all advanced tools from ASML and Tokyo Electron could be sold to China going forward.
Despite these stringent measures, the U.S. acknowledges the importance of international cooperation in enforcing export controls. By exempting over 30 countries, including key allies, the rule seeks to maintain diplomatic relationships and ensure collective security objectives are met, without overly straining international relations. The exact details of the rule, still in draft form, may change before it is officially published next month.
China has responded critically to these impending restrictions, with a foreign ministry spokesperson condemning the U.S. actions as harmful to global trade and asserting that such measures would only strengthen China's resolve to become technologically self-reliant.
