The United States imposed export controls on Friday (7th) to completely block China’s access to high-end chips, a move that experts say will leave China behind by more than 5 to 10 years. The U.S. weapon is the Foreign Direct Product Rule (FDPR), which extends the authority of authorities beyond U.S. borders, and has been used against China’s Huawei and the Russian government.
The United States announced a number of chip export control measures. American companies must obtain government licenses to export advanced chips and production equipment to China, and chips manufactured in other countries using American technology are also included in this scope.
Senior U.S. officials said the new move would prevent high-end chips from being used in Chinese supercomputers that could be developed for nuclear or military applications.
U.S. officials are using the FDPR this time. The regulation was first implemented in 1959, and basically only stipulates that if the technology of the United States is used in the production process of the product, the US government has the power to prohibit the sale of the product, even if the product is produced in another country.
The United States cut off Huawei’s semiconductor supply through the FDPR in August 2020, but later found that Huawei could still obtain supplies through factories outside the United States, bypassing sanctions.
In the end, the U.S. government found the sticking point: Nearly all wafer fabs use vital equipment from U.S. suppliers. Therefore, the United States expanded the scope of export control licenses to include wafer production equipment.
Not only American technology, but also production equipment is included in the regulations
The expanded FDPR did deal a blow to Huawei’s smartphone business, and was used by the United States to sanction Russia and Belarus after Russia invaded Ukraine.
Although the United States has included a number of Chinese supercomputer manufacturers on the Entity List and cut off their channels for purchasing U.S. chips, these Chinese companies have gradually turned to designing their own chips and seeking production, which has become the latest target of the United States.
Karl Freund, a chip consultant at Cambrian AI, explained that this time the United States is banning any semiconductor manufacturer using American equipment from selling advanced chips to China.
“China will have to develop its own manufacturing technology, and also its own processor technology, to replace the American or Western technology they are using,” Freund said.
He pointed out that this means it will take another five to ten years for China to catch up with today’s technology.
Jim Lewis, an information security expert at the Center for Strategic and International Studies (CSIS), a Washington think tank, also said: “China’s development will be set back a few years. China will not give up chip production … but it will slow them down.”
attitude of allies
Lewis described the extent of the latest regulations as comparable to the heights of the Cold War.
Dan Fisher-Owens, an expert on chip control law at Berliner Corcoran & Rowe, said the expansion of the FDPR in the United States closed a loophole in export control authority. But the U.S. has been cautious about using the rule, worried about impacting foreign companies in the process and creating friction with other allies.
However, U.S. officials admitted that other allies have not committed to the United States to implement similar measures, and discussions with allies are ongoing.
“We know that if other countries don’t join us, the effectiveness of unilateral controls diminishes over time,” said one official. “If foreign competitors do not comply with such controls, the United States even risks losing competitive leadership.”