The USA is again tinkering with the rules for exporting advanced microchips to China. The Biden administration wants to close loopholes.

The USA is tightening its measures on the export of microchips to China. The rules announced in October last year are being tightened. The basic principles remain unchanged, as does the goal: China should not force high-tech breakthroughs that could lead to military differences using American technology.

Chinese chip designers end up on the blacklist because it implies that manufacturers won’t be allowed to build these companies’ designs using American technology unless they get a license to do so. In addition, it is becoming increasingly difficult to sell chip manufacturing equipment to Chinese companies. Bloomberg knows this from anonymous sources.

Close loopholes

President Biden’s government wants to close further loopholes. This would make it more difficult to ship embargoed hardware to third countries after which it would continue to be imported by China. Deliveries to subsidiaries of Chinese organizations operating outside the country are therefore also restricted. For countries used as conduits, the US also requires licenses for such deliveries.

The US is pursuing a fairly aggressive strategy to deny China access to advanced microchips. These rules are particularly relevant for Nvidia’s AI accelerators, as they currently have no equal anywhere.

Turning back

The entire American technology sector is waiving the rules and is said to have already lost hundreds of millions of dollars due to the restrictions. These continue to work in the short term, but only seem to delay China’s plans. The country is trying to stand on its own two feet in producing its own advanced chips, and that appears to be increasingly successful, although China is certainly lagging behind the US.

In addition, China also has claws. In response to deteriorating trade relations, the country has already taken (or not taken) some measures that have an impact on the Western chip world.