The Trump administration has announced a significant tightening of export controls on Chinese companies, particularly those in the semiconductor industry, in a move aimed at impeding China’s technological advancement.
US Tightens Export Rules, Adding Entity List Subsidiaries
The U.S. Department of Commerce has introduced stricter regulations that automatically add subsidiaries of entities on the government’s “entity list” to the blacklist, the Financial Times reported. This list comprises foreign entities and individuals subject to export controls, requiring U.S. companies to obtain a license for exports to these groups.
The new rule is applicable to companies that are 50% or more owned by entities on the entity list.
Notably, the new rule does not specifically target China but includes subsidiaries of Chinese chipmakers such as Huawei and Semiconductor Manufacturing International Corporation (SMIC).
The Commerce Department aims to close a loophole that previously allowed exports to subsidiaries of listed companies unless the subsidiary was also specifically blacklisted by the U.S. government.
This move is among the first actions by the Trump administration to address concerns about China acquiring U.S. technology that could potentially enhance the People’s Liberation Army.
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Experts Hail US Export Rule; China Calls It ‘Extremely Malicious’
Chris McGuire, a former official with the National Security Council in the previous Trump and Biden administrations, said the rule was a “very needed correction to a broken part of our export control system”.
Gregory Allen, an export control expert at the Center for Strategic and International Studies think-tank, called this a “massive change.”
Meanwhile, as per China’s commerce ministry, the new regulation was “extremely malicious.” They also slammed the U.S. for “generalizing” the issue of national security as well as “abusing export controls”.
Nvidia Warns US chip Export Rules May Boost Chinese Rivals
The new export control measures come at a time when the U.S. is intensifying its efforts to curb China’s technological advancement. This move could significantly impact the operations of Chinese chipmakers, including Huawei and SMIC, and their ability to access advanced semiconductor technology.
Earlier, Nvidia (NASDAQ:NVDA) CEO Jensen Huang warned that U.S. export controls on China might have backfired, propelling domestic competitors like Huawei. This new rule could further impact the competitive landscape in the semiconductor industry.
Meanwhile, White House AI and crypto czar David Sacks previously urged Washington to update export control policies, warning that restricting U.S. companies like Nvidia from selling chips abroad could hand Chinese companies the advantage in the global race for AI dominance.
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