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US Commerce Secretary Gina Raimondo has recently signaled a tougher stance on China's access to advanced semiconductor technologies. Raimondo emphasized preventing China from obtaining sophisticated chips, particularly for military purposes (via Bloomberg).

Speaking to reporters during a trade delegation visit to Manila, Raimondo stated, "We cannot allow China to have access for their military advancement to our most sophisticated technology."

She pledged to take necessary measures to safeguard US interests, including expanding controls on semiconductor exports. "So yes, we will do whatever it takes to protect our people, including expanding our controls," the US commerce secretary said.

New Restrictions on Chinese Tech Companies

The Biden administration is considering imposing new restrictions on several Chinese tech companies, including ChangXin Memory Technologies Inc., a prominent memory chipmaker.

For years, the US has targeted China's chip industry, imposing stringent controls on the export of advanced chipmaking machines and chips. Despite these efforts, loopholes remain, prompting Washington to collaborate with allies such as Japan and the Netherlands to tighten restrictions further.

The US Commerce Department is contemplating adding ChangXin and other Chinese firms to its Entity List, restricting their access to crucial US technology. Raimondo reiterated the government's commitment to evaluating and strengthening measures to prevent China from leveraging American chip and AI technologies for military purposes.

China's Response to Tech Curbs

China is taking significant steps to bolster its semiconductor capabilities in response to US restrictions. The National Integrated Circuit Industry Investment Fund, also known as the Big Fund, has raised over $27 billion for its largest chip fund yet. This initiative aims to achieve self-sufficiency in chip production amidst tightening US regulations.

The Big Fund, established in 2014, plays a vital role in supporting local chipmakers. With approximately $45 billion in capital, it has backed numerous companies, including Semiconductor Manufacturing International Corp. (SMIC) and Yangtze Memory Technologies Co.

To counter China's efforts, the US government is pressuring allies such as the Netherlands, Germany, South Korea, and Japan to tighten restrictions on China's access to semiconductor technology. This includes limiting exports, halting service, and repairing chipmaking equipment for Chinese clients.

Last year, the US Commerce Department also unveiled updated export control rules to increase effectiveness in restricting access to critical technologies. These regulations will affect advanced artificial intelligence chips, including Nvidia's H800 and A800 products.