The U.S. government has doubled down on efforts to curtail China’s semiconductor ambitions with a third wave of export restrictions in just three years, according to Reuters.
By targeting over 140 companies — including chip-equipment makers and advanced memory chip suppliers — these measures are a continuation of the Biden administration’s aggressive policies to limit China’s technological capabilities, particularly in areas with military applications. Now, experts say these measures are likely to persist under the incoming Trump administration, which has signaled a continuation of hardline policies on Chinese imports.
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Expanding restrictions
On Dec. 2, the Biden administration announced sweeping new restrictions targeting Chinese semiconductor companies, investment firms, and high-bandwidth memory chips crucial for artificial intelligence (AI) applications.
The restrictions also encompass 24 chipmaking tools and three software tools used in semiconductor manufacturing. Notably, major Chinese players like Naura Technology Group, Swaysure Technology, Si’En Qingdao, and Shenzhen Pensun were added to America’s “Entity List,” which effectively bars U.S. firms from doing business with them without special licenses.
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“China will use advancements in semiconductor manufacturing to support its military modernization,” said U.S. Commerce Secretary Gina Raimondo as she emphasized the strategic intent behind the restrictions. “We cannot allow that to happen.”
Raimondo also noted that the measures are designed to safeguard U.S. national security by limiting China’s ability to produce advanced chips that could be used in military applications or to undermine American technological dominance. She also underscored the importance of these restrictions in order to maintain a “competitive edge,” stating that unchecked advancements in China’s chipmaking capabilities could pose risks to national security and global trade.
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Impact on global supply chains
These new measures also expand the foreign direct product rule, which allows the U.S. to restrict exports of items containing even minimal American technology to Chinese firms. While countries like Israel, Malaysia, and South Korea will be affected, the Netherlands and Japan have been exempted, according to Washington. Dutch chip equipment giant ASML noted that while the rules may not “immediately impact” its business, future changes could influence exports of its advanced tools.
South Korea’s Samsung and SK Hynix, along with U.S.-based Micron, are expected to feel the impact of restrictions on high-bandwidth memory chips (known as HBM2 and above). These chips are critical for training advanced AI models, with Samsung alone deriving 20 percent of its HBM chip revenue from China, Reuters notes.
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Meanwhile, the Chinese Communist Party (CCP) has condemned the latest restrictions as “economic coercion” and an example of “non-market practices.” “Such behavior undermines the international economic trade order and disrupts global supply chains,” said Chinese Foreign Ministry spokesperson Lin Jian. China’s commerce ministry has also pledged to take “stern measures” in protecting China’s domestic firms.
Despite Beijing’s intensified efforts to achieve semiconductor self-sufficiency, the nation lags significantly behind industry leaders like the U.S.’s Nvidia, Taiwan’s TSMC, and the Netherlands’ ASML. Nonetheless, China remains resolute in its ambition to close the gap, driven by significant investments and state-backed initiatives.
Retaliation under Trump?
The latest crackdown comes just weeks before Republican President-elect Donald Trump assumes office. Trump, a staunch supporter of bolstering U.S. manufacturing, is widely expected to retain and possibly expand upon Biden’s policies, given his own history of imposing tariffs on Chinese goods during his first term. But analysts anticipate a seamless policy-transition, with both administrations aligned on the need to curtail China’s tech dominance.
The new measures specifically target Chinese firms with ties to Huawei Technologies — a company that has been severely hampered by previous U.S. sanctions. In addition, the U.S. added private equity firms and technology companies like Wise Road Capital, Wingtech Technology, and JAC Capital to its “Entity List” for allegedly aiding China’s acquisition of sensitive semiconductor manufacturing capabilities.
This marked the first time investment firms were included on the list, highlighting the U.S.’ evolving strategy to choke off Chinese access to critical technology by limiting financial backing for acquisitions and partnerships that could beef up China’s semiconductor industry.
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Broader implications for trade
Washington’s aggressive stance underscores its intent to dominate the semiconductor supply chain while maintaining strategic leverage over China. By coordinating with key allies like Japan and the Netherlands, the U.S. aims to isolate Beijing technologically without alienating its partners. But this approach also risks escalating trade tensions, particularly as Beijing ramps up countermeasures, notes Raimondo.
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As the Trump administration prepares to take office, the continuity of Biden-era tariffs and export controls reflect a bipartisan consensus on confronting China’s semiconductor ambitions. But with U.S. companies like Lam Research and Applied Materials, alongside international giants such as ASML, caught in the crossfire, the ripple effects on the global semiconductor industry could be far-reaching.
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