In an effort to keep American technology from helping China’s military, the Commerce Department has implemented new policies regarding the sale of computer chips, semiconductors, and chip-production equipment.
U.S. manufacturers are now required to obtain a license from the Commerce Department before they sell to China, while international companies are forbidden from exporting chips of U.S. origin. These new rules, implemented on Oct. 7, encompass a broad range of “U.S. persons,” including individuals with U.S. passports, and have already begun to make waves.
The action by the Commerce Department came days after the Department of Defense – following federal law – released the names of “Chinese military companies” operating directly or indirectly in the United States.
U.S. businesses are stepping back from the Chinese market as they assess whether they can comply with the restrictions, and multiple projects have been put on pause. These include the KLA Corporation and the Lam Research Corporation, who supply the Yangtze Memory Technologies Corporation (YMTC), a technology company owned by the Chinese state that is the country’s leading memory manufacturer.
U.S. employees have been withdrawn for the moment, while maintenance and installation of already sold equipment has been suspended, limiting YMTC’s production abilities until the matter has been resolved. In addition, YMTC itself has been placed on the Commerce Department’s list of “unverified” companies, which could potentially lead to it being blacklisted entirely.
This comes almost two months after the signing of the CHIPS and Science Act, which earmarked $52 billion in subsidies for companies building chip manufacturing plants here in the US. Signed in early August, the Act has already seen significant results, including plans for a $20 billion semiconductor plant in Ohio announced by Intel and a $15 billion Micron semiconductor plant slated for Idaho.
The Act was the product of a bipartisan agreement between the Biden Administration and congressional leaders with the goal of supercharging the country’s tech industry. It came in the wake of a tentative proposal that Intel presented to the Commerce Department back in November of 2021, a plan that called for Intel to purchase and reactivate an abandoned chip factory in Chengdu, China.
That proposed move (subsequently cancelled) sparked concern among government officials, and it was likely a strong motivator behind the passage of the CHIPS and Science Act, along with further efforts to support America’s technological advancement and not miss out on the growing computer chip market. It remains to be seen how effective these new policies will be in curbing China’s growth.
