US strengthens sales restrictions on AI memory and manufacturing equipment to China - 140 companies added to the banned list

December 2, 2024 19:00 JST
New regulations, applicable to 24 types of manufacturing equipment and 3 types of software tools
The names of companies to be included in the embargo list are unknown - reported to include Beihai Huachuang, among others
The US Department of Commerce announced new restrictions on sales of high-bandwidth memory (HBM) for artificial intelligence (AI) and semiconductor manufacturing equipment to China. The restrictions also apply to products manufactured by US companies abroad. In addition, 140 Chinese companies have been added to the blacklist for allegedly operating under instructions from the Chinese government.
The initial statement did not reveal the names of the companies to be blacklisted, but Reuters reported, citing sources, that Beihai Huachuang (Nowra Technology) and Taki-Jing Technology (Paiotech) are among the targets.
Bloomberg reported last week, citing sources, that the Biden administration is considering strengthening restrictions on the sale of semiconductor equipment and AI memory semiconductors to China. However, they indicated that the measures would not be as severe as previously anticipated.

According to senior US government officials, details on new sanctions and additions to the 'entity list' are expected to be announced within two days.
The Bureau of Industry and Security (BIS) of the US Department of Commerce stated that the United States aims to limit China's ability to produce important technologies for human rights suppression and military modernization. They announced adding companies involved in advancing China's advanced semiconductors under the guidance of the Chinese government to the entity list.
According to government officials, the regulations to be announced on the 2nd will restrict the sale of 24 types of manufacturing equipment and 3 types of software tools to China, excluding countries that have independently imposed similar restrictions. This aims to pave the way for countries like Japan and the Netherlands to introduce similar regulations. Both Japan and the Netherlands have not publicly indicated their intention to introduce such regulations.
City analyst Kevin Chen pointed out last week that the scope of these regulations will temporarily ease investor concerns about the strengthening of export controls, but there is a possibility of further regulations under the upcoming Trump administration next year.

Commerce Secretary Leemond stated, "These measures represent the culmination of the Biden-Harris administration's targeted approach to weakening China's ability to indigenize advanced technologies that pose a risk to our national security, while coordinating with allied countries and partners. This administration is unparalleled in its strict approach to strategically addressing China's military modernization through export controls."
The new regulations will restrict the sale of High Bandwidth Memory (HBM), an essential component of AI for data processing. In addition to existing regulations, this will also affect advanced logic chips that function as the brain of devices.
According to government officials, the semiconductor regulations will apply to HBM2 and more advanced semiconductors, utilizing the Foreign Direct Product Rule (FDPR) to introduce restrictive measures on foreign-made products that even slightly use US technology.

Officials mentioned that there are exceptions to this regulation, allowing Western companies to package HBM2 in China. This exception is only applicable to packaging with low risk of technology being transferred to Chinese firms.