The tense situation between the governments of the United States and China keeps escalating. In recent weeks, US authorities have been investigating a potential hacking campaign of the country’s telecommunications platforms. Now, the US is imposing new restrictions on the shipment of chips to China.
New US trade restrictions seek to cut off China’s access to AI chips
The new set of restrictions prevents up to 140 US companies from exporting semiconductors to Chinese companies. Unofficially, the decision might be a reaction to Huawei’s successful circumvention of the restrictions to obtain AI chips made with US technology. The Chinese giant reportedly turned to third-party companies for this. Thus, the United States could be extending the scope of the restrictions to avoid similar situations in the future.
Washington’s new move seems to seek to prevent China from receiving AI chips, which it could use to boost its military power. In fact, it specifically prohibits the shipment of high-bandwidth memory (HMB) chips. These chips are commonly used in hardware dedicated to AI training. The restrictions also impact 24 other chipmaking tools and three software tools. This is the third time in three years that the Biden administration has escalated chip trade restrictions against China.
The restrictions mean that companies will have to apply for a license to do business with Chinese companies. But Washington’s tendency for some time has been to revoke licenses rather than grant them.
A new potential blow for Huawei
It’s noteworthy that the US restrictions don’t just affect American companies. They also impact companies that use American technology to operate. For example, ASML, a Dutch brand that supplies lithography machines for chip production, is on the list. ASML said the new restrictions will not affect its financial projections. The company had already stopped sending modern lithography machines to China. However, ASML will have to stop sending older tech, such as Deep Ultraviolet (DUV) Lithography machines.
According to reports, SMIC is using DUV machines to produce chips. SMIC is the Chinese company that manufactures Huawei’s Kirin chips. After all, the restrictions prevent Huawei from ordering chip production from TSMC and Samsung Foundry.
SMIC’s factories were already struggling to mass produce 7nm chips and have been unable to deploy 5nm wafers due to not having access to modern machines. It remains to be seen whether the new restrictions will also negatively impact Kirin chip manufacturing. An earlier report suggested that Huawei’s next-generation chips will remain on the outdated 7nm process, and the new restrictions could help make the situation worse.
