Policy Backgrounders

Curbs on Chip Exports Strengthened

October 20, 2023

The US Commerce Department announced strengthened restrictions on exports of advanced semiconductor chips and related manufacturing equipment to China, expanding export controls originally introduced in October 2022.

The restrictions expand licensing requirements beyond China to include exports to all 22 countries to which the US maintains an arms embargo, including both companies and their subsidiaries with ties to those countries in an effort to prevent workarounds through third countries and firms’ foreign subsidiaries.

• The expanded rules focus on cutting-edge advanced chips and add new provisions related to chips used in AI applications but do not apply to less-advanced chips such as those used in phones, video games, and electric vehicles.
• However, Huawei’s release of a phone using a chip more advanced than those covered by the restrictions has prompted an ongoing investigation by the Commerce Department.
• China’s growing capabilities and the dependence of key international companies including Taiwan’s TSMC on the Chinese market complicate the US’ efforts to restrict sales of advanced equipment to China; further US investments in research, design, and fabrication of advanced chips are needed to maintain global leadership.