US Secretary of Commerce Gina Raimondo testifies before the Senate Appropriations Committee May 16, 2023 in Washington, DC.
The US Commerce Department updated its export regulations on Tuesday to prevent China from getting advanced computer chips and related equipment. The modification to the original constraints applied a year ago, target military uses of these devices, such as hypersonic missiles and artificial intelligence (AI).
US Commerce Secretary Gina Raimondo stressed that these updated chip export controls aim to safeguard technologies with "clear national security or human rights implications."
"The vast majority of semiconductors will remain unrestricted. But when we identify national security or human rights threats, we will act decisively and in concert with our allies, the US official said, as quoted in the report by AP News.
The US chip export restriction changes were made after studies on technology and discussions with the business world were conducted. They added a "gray zone" to keep an eye on semiconductors that could still be used for military purposes even if they do not meet the trade limitation levels set. Chip exports might be restricted to Macao or US arms embargoed businesses to avoid circumvention.
New Policy Not Intended to Curb China's Economic Growth
New US chip export regulations are also part of the policy reforms, making it harder for China to produce sophisticated chips abroad. As part of these revisions, the list of manufacturing equipment subject to export controls has increased.
Raimondo noted that these restrictions are not designed to hamper China's economic progress, although the Chinese government may have been irritated by the export curbs since it considered high-level semiconductor design and production to be essential for its economic and geopolitical goals.
The US government argues that China's access to advanced technology could be used to control hypersonic missiles, set up powerful surveillance systems, or break top-secret U.S. codes. Leading authorities on artificial intelligence have also issued warnings that badly controlled technology might endanger mankind.
However, as AI technology has many practical business applications, these more stringent regulations may have an impact on Chinese companies developing AI chatbots, like TikTok's parent company ByteDance and internet behemoth Baidu. As AI affects retail and healthcare, these restrictions may damage China's economy.
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Chip Makers Oppose Tighter Chip Controls
The regulations are anticipated to impact US chip producers like Nvidia, AMD, and Intel's sales to China. Some semiconductor manufacturers, which receive up to a third of their income from Chinese customers, have recently expressed opposition to harsher US chip restrictions.
US officials stated that commercial chips, such as those used in smartphones, laptops, electric vehicles, and gaming systems, would be exempt from the regulations, according to The New York Times. Although some measures may take effect sooner, most new rules will take effect in 30 days.
The Semiconductor Industry Association, which represents major chip makers, said it was evaluating these amended requirements and stressed the need to balance national security with a strong US semiconductor sector. Nvidia stated that the company follows all regulations and does not foresee any short-term financial impacts from the new requirements.
Reuters reported that the Chinese government view these US chip exports restrictions as a historic shift in US-China tech policy and accused the United States of employing export controls to stifle Chinese businesses.
In August, Secretary Raimondo and her Chinese counterparts agreed to share export control information. A senior administration source who requested anonymity claimed the US did not communicate with China on the revised export curbs. China's premier, Li Qiang, asked Washington to focus on Taiwan, technology, and other issues to improve relations.
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