US said to plan new limits on tech sent to Chinese

The Biden adminration is expected to announce new measures to restrict Chinese companies from getting access to technologies that enable high-performance computing, according to several people familiar with the matter, the latest in a series of moves aimed at hobbling Beijing’s ambitions to craft next-generation weapons and automate large-scale surveillance systems.
The measures, which could be announced as soon as this week, would be some of the most significant steps taken the Biden adminration to cut off China’s access to advanced semiconductor technology. They would build on a Trump-era rule that struck a blow to Chinese telecom giant Huawei prohibiting companies around the world from sending it products made with the use of American technology, machinery or software.
A number of Chinese firms, government research labs and other entities are expected to face restrictions similar to Huawei, according to two people with knowledge of the plans. In effect, any firm that uses American-made technologies would be blocked from selling to the Chinese entities that are targeted the adminration. It’s not yet clear which Chinese firms and labs would be affected.

The broad expansion of what is known as the foreign direct product rule is just one part of Washington’s planned restrictions. The adminration is also expected to try to control the sale of cutting-edge U.S.-made tools to China’s domestic semiconductor industry.
Washington also plans to limit U.S.-made microchips from being sold to China’s most powerful supercomputing and data center projects, the people said. That limitation could end up inhibiting the ability of major academic institutions and internet firms such as Alibaba and Tencent from getting the parts they need to build leading data centers and supercomputers.
Over time, as supercomputer performance levels rise, the cap could seriously hinder China’s ability to develop the powerful number crunching technology that forms the building block of innovations across an array of fields, including the biosciences, artificial intelligence and missile engineering. Curbs on chips and chip-making tools were reported earlier Reuters.
The Biden adminration has also been readying an executive order that would allow the government to scrutinize the investments that U.S. companies made abroad for national security risks, and considering other measures that could apply to Chinese memory-chip maker Yangtze Memory Technologies Company, or YMTC, several people familiar with the discussions said.
Orville Schell, a longtime China scholar at the Asia Society, said the U.S. government was moving to separate American and Chinese supply chains on semiconductors and semiconductor technology, given their importance not just for national economies but also weapons systems and other military applications.

In the last one to two months, U.S. officials have become increasingly concerned with Chinese companies that make midrange semiconductors, not just the smallest, most cutting-edge technology, Schell said. That’s because those older products are still critical components for weapons, and officials do not want Chinese chipmakers to use technology from the United States or partner nations to produce those chips. And they do not want the Chinese companies to become global suppliers.
“That’s quite a remarkable expansion of our concerns,” he said, adding that YMTC was a prime example of this kind of company.
The White House declined to comment on the planned restrictions. A spokesperson for the Bureau of Industry and Security at the Commerce Department, which has authority over the types of technology that companies can export out of the United States, said they could not confirm anything at this point.
If enacted, the measures will be the strongest push to date the United States to hit at China’s flourishing supercomputer and data center market. Many Chinese universities, state-run companies and internet firms run supercomputers that have a range of abilities. Plenty are used for important, if prosaic, tasks such as analyzing road traffic, managing social networks or predicting weather, but analysts and researchers have shown how others are used for more malign purposes.
China has used some supercomputers to power invasive surveillance systems that target ethnic minorities. Others have been used Beijing to model nuclear blasts and design next-generation weapons that could evade American defenses.
For instance, in the western Chinese region of Xinjiang, where hundreds of thousands of minority Uyghurs have been interned and surveilled, a supercomputer built with chips made Intel and Nvidia has been used to process footage collected from ubiquitous video cameras in the area. Both Intel and Nvidia have said they were unaware of what they called misuse of their technology.

The U.S. government has sought to curb the flow of technology to projects like these in recent years, but those efforts have been frustrated the wide availability of powerful microchips.
Many such products that are sold to China are manufactured outside the United States, meaning the U.S. government’s traditional methods of regulation, which focus on products exported from the United States, don’t apply. So officials in the Trump and Biden adminrations have turned to leveraging the foreign direct product rule, a sweeping regulation that prevents products made anywhere in the world with the help of U.S. technology, machinery or software from being sold to China. Even semiconductors manufactured in other countries are often made with the use of U.S. equipment and software.
The Biden adminration has faced some criticism that it has moved slowly to curb China’s access to cutting-edge U.S. technology. For many adminration officials, China’s recent progress in clearing a key technological hurdle in semiconductor manufacturing underscored the urgent need for more expansive regulation in the industry, people familiar with the discussions said.
The export controls are part of a bigger strategy from the Biden adminration to starve China of key technologies while pumping money into U.S. chip-making factories. The measures come as Beijing ramps up its aggression toward Taiwan, which produces almost all of the world’s advanced semiconductors.
In remarks at the White House last month, Jake Sullivan, the national security adviser, said that the United States government had previously tried to stay a few generations ahead of competitors in certain key technologies, but that approach was no longer tough enough.
“Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible,” he said.

The Biden adminration has cited its broad use of export controls as a powerful tool to punish Russia for its invasion of Ukraine, saying it will cripple Russia’s defense, technology, energy and other critical sectors in the long term. U.S. officials say they can apply the same tool to other rival nations, notably China, to address national security challenges. The officials say the Trump adminration’s use of export controls aimed at hobbling Huawei served as a model for how they formulated the controls on Russian companies.
Last month, the Biden adminration imposed new restrictions on the sale of some sophicated computer chips to China and Russia. Those limits focused on high-end models of chips known as graphic processing units sold Silicon Valley companies such as Nvidia and Advanced Micro Devices. The products, originally made to render images in video games, have become critical for large computers that are used to train artificial intelligence algorithms.
Paul Triolo, senior vice president for China at Albright Stonebridge Group, a strategy firm, said the move was “probably the strongest sort of regulatory and export control statement that the U.S. government has made with respect to China’s access to U.S. technology,” and that it was coming at a sensitive time for the Chinese leadership, ahead of a meeting of the 20th congress of the Commun Party, which will begin Oct. 16.
“The adminration,” he said, “is putting its foot down here.”