The Biden administration intensifies trade restrictions on China, targeting advanced AI and chip technologies.

U.S. Expands Trade Restrictions on China: AI and Chip Controls Tightened


The Biden administration intensifies trade restrictions on China, targeting advanced AI and chip technologies. Learn about the latest impacts on global trade.


The Biden administration has escalated its efforts to restrict the flow of advanced technologies to China, adding more than two dozen entities to the U.S. restricted trade list. This move, announced on January 15, signals a significant tightening of trade controls aimed at countering China’s advancements in artificial intelligence (AI) and semiconductor technology. Among the companies affected are Zhipu AI, a developer of large language models, and Sophgo, a chip company linked to Huawei’s controversial AI processor.

A Closer Look at the Entity List Expansion

The U.S. Commerce Department added 25 China-based companies and two Singapore-based firms to its Entity List. This designation effectively bans these companies from receiving goods or technology exports from the U.S. without a special license, which is rarely granted. The move underscores Washington’s growing concerns over the potential military applications of advanced AI and chip technologies developed by Chinese firms.
Zhipu AI, a notable addition to the list, has been linked to advancing China’s military modernization through cutting-edge AI research. Investors such as Alibaba and Tencent have previously supported the company. Meanwhile, Sophgo came under scrutiny after a chip in Huawei’s Ascend 910B multi-chip AI system was traced back to Taiwan Semiconductor Manufacturing Co. (TSMC). Sophgo’s involvement highlights ongoing efforts to curb Huawei’s access to critical technology.

Targeting AI and Chip Technologies

The latest restrictions build on previous measures to limit China’s ability to develop advanced AI systems and semiconductors. The U.S. is now imposing tighter controls on semiconductors capable of supporting AI applications. These restrictions apply to chips at the 14 or 16-nanometer nodes or below, affecting companies beyond TSMC.
Alan Estevez, a senior Commerce Department official, emphasized the importance of holding chip manufacturers accountable. “We are ensuring that foundries verify their chips are not being diverted to restricted entities,” Estevez stated. The rule also introduces stricter controls on DRAM technology used in high-bandwidth memory for AI processors, directly impacting companies like Changxin Memory Technologies (CXMT).

Repercussions for Key Players

Zhipu AI responded to the announcement by dismissing the decision as baseless, asserting that the inclusion on the Entity List would not significantly impact its operations. The company claimed to have mastered the end-to-end core technology for large language models. Similarly, Sophgo denied any business relationship with Huawei, despite evidence suggesting otherwise.
For Huawei, the latest measures continue restrictions that began in 2019. As a central figure in China’s ambitions for AI and semiconductors, Huawei’s partnerships with other firms have drawn intense scrutiny from U.S. regulators. In November 2024, the U.S. ordered TSMC to halt shipments of certain advanced chips, marking another effort to stifle Huawei’s technological advancements.

Strategic Implications

The expanded controls align with broader U.S. strategies to curtail China’s military and technological capabilities. By targeting companies that aid in developing advanced weapons systems and surveillance technologies, the U.S. aims to maintain a technological edge while mitigating risks to national security.
These measures also signal a shift in how export controls are enforced. Under certain conditions, companies can bypass licensing requirements, such as partnering with trusted chip packagers and adhering to rigorous reporting obligations. However, these provisions are unlikely to ease the burden on affected firms.

International Response and Industry Impact

The implications of these trade restrictions extend beyond U.S.-China relations. Key players like Samsung and TSMC are also navigating the tightened rules. While TSMC declined to comment on the latest developments, industry experts predict disruptions in global chip supply chains.
Additionally, the decision has drawn criticism from Chinese officials and industry stakeholders. A spokesperson for the Chinese embassy in Washington accused the U.S. of undermining fair trade principles. Despite these objections, the Biden administration remains committed to enforcing robust controls to protect national security interests.

What’s Next?

As the Biden administration enters the final weeks of its term, it has unveiled a series of measures to regulate AI and semiconductor technologies. On January 13, the U.S. announced an ambitious plan to oversee advanced AI development globally, signaling a broader commitment to technological governance.
For businesses and policymakers, these developments highlight the growing complexity of navigating international trade and technology regulations. Companies operating in AI and semiconductor industries must adapt to an evolving landscape shaped by geopolitical tensions and regulatory scrutiny.
The U.S. government’s intensified efforts to control the export of advanced technologies to China reflect a broader strategy to safeguard national security and maintain a competitive edge. By targeting key players like Zhipu AI and Sophgo, the Biden administration aims to disrupt China’s ambitions in AI and semiconductor development.
As these restrictions reshape global trade dynamics, companies and policymakers alike must grapple with the challenges of compliance and innovation in an increasingly regulated environment.

Source:  (Reuters)

 

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