US prepares another blow to China: wants more allies to stop selling equipment to manufacture chips

Increasing US pressure on China aims to block access to high-tech chip equipment, challenging Chinese semiconductor manufacturing infrastructure

The US chamber seems to have no end. And is that your next bullet directed at China is ready to be fired. The US administration has confirmed that it is not willing to allow advanced chip manufacturing equipment incorporating US-origin technologies to fall into the hands of Chinese integrated circuit manufacturers. Most of the sanctions approved by Joe Biden's government since October 7, 2022 have this objective.

Dutch company ASML, Japanese companies Tokyo Electron and Canon, and South Korean companies Samsung and SK Hynix are some of which US bans prevent from exporting some of their lithography equipment to China. The pressure on their businesses is such that the US government seems to be aware that it cannot demand much more from them. However, this does not mean that its scope for action has been exhausted. Reuters has confirmed that Joe Biden's administration is preparing new sanctions to halt the export of chipmaking equipment from some foreign countries to China.

For now, ASML and Tokyo Electron can breathe a sigh of relief

The source of Reuters confirmed that the new sanctions package exempts semiconductor production equipment manufacturers from the Netherlands, Japan and South Korea, whose businesses were affected by the previous bans. Interestingly, ASML and Tokyo Electron shares rose noticeably a few hours ago after this news broke. In any case, what the US government intends is to “turn off the tap” to six Chinese chip factories that are still receiving equipment from abroad.

The US administration claims that some companies from Israel, Taiwan, Singapore and Malaysia are sending equipment to six Chinese semiconductor manufacturers that play a fundamental role in the integrated circuit manufacturing infrastructure of the country led by Xi Jinping. And presumably these chip-making machines incorporate technologies of North American origin. Unfortunately, for now, we don't know which Chinese semiconductor manufacturers would be affected by these new sanctions, but possibly SMIC and Hua Hong Semiconductor are two of them.

New sanctions planned for August

According to Reuters, the new package of US bans will come into force during the month of August and, as expected, Chinese Foreign Ministry spokesman Lin Jian harshly criticized the planned US measure: “US efforts to coerce other countries and suppress China's semiconductor industry harm global trade and all parties involved [...] Containment and repression cannot stop China's development. Just will strengthen China's resolve and capacity to develop their scientific and technological self-sufficiency”.

The backdrop to this complex scenario is none other than the effort that the US government is making to prevent China from continuing to develop its capabilities in the fields of supercomputing and artificial intelligence. Joe Biden's administration is convinced that these advances will allow the Chinese government to significantly boost its weaponry. In any case, the US runs an important risk. If too much pressure is put on the countries I mentioned in this article to limit their exports to China, there is a possibility that one of them will rebel and “jump ship”. After all, there is a lot of money at stake.

Image | ASML

More information | Reuters