U.S. Sanctions Force Western Suppliers to Cut Ties with Chinese Chipmakers

Official added that rules were not meant to break everything in trade, but to only “get at China’s capability to produce chips at a specified level.”

Biden administration announced that China will be limiting its ability to produce high-end semiconductors with dual uses in military and commercial technology. Some of these products could even be used in weapons of mass destruction. China is still behind South Korea, Taiwan and the United States when it comes to producing the highest-tech chips.

These controls prohibit the export to China of American-made equipment used to make advanced chips. The controls also prohibit the export to China of any U.S. components or tools that can be used in high-end semiconductor production.

The rules prohibit “U.S.” from doing business with China in a unique move that may have caused some companies to suspend all trade with China. The rules prohibit “U.S. persons,” which includes American workers and U.S. green card holders, from supporting advanced chip production in China unless they are granted a U.S. government licence.
ASML, a Dutch manufacturer high-end semiconductor manufacturing equipment, instructed its U.S. personnel to immediately stop any contact with Chinese customers.

“ASML U.S. workers must refrain from shipping, supporting, or servicing any Chinese customers until further notice while ASML actively assesses which particular fabs are affected,” ASML spokesperson confirmed.
According to the company, the freeze is applicable to U.S citizens, green-card holders, and foreign nationals living in the United States.

Rasser stated that the rules make it difficult for tech workers to make tough decisions.
“Green-card holders who are U.S. citizens are going to be in a difficult situation. He asked them whether they wanted to remain in China and surrender their U.S. citizen status, or if they wanted to move.

The U.S. and Western suppliers are also cutting ties with Chinese chip factories. KLA Corp. and Lam Research Corp. both based in California have ceased support for equipment already installed and temporarily halted the installation of new equipment at Chinese chipmaker YMTC. The Wall Street Journal reported. The suppliers declined comment. YMTC did not respond to a request for comments.

Equipment suppliers now have to verify that their Chinese customers produce advanced chips. This is causing some trade to be frozen as equipment suppliers “are scrambling for information about what work Chinese factories do,” Kevin Wolf, an ex-senior Commerce Department official and now a partner at Akingump Strauss Hauer Feld. “Companies who don’t want make a mistake, or violate the law, will withdraw.”