The U.S. plans to expand a chip export ban on China, ratcheting up the tech war between the two countries

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The Biden administration plans to broaden curbs on U.S. exports to China of semiconductors used in artificial intelligence and chipmaking tools, Reuters reported Monday.

The Commerce Department plans to impose the restrictions on three companies: KLA, Lam Research, and Applied Materials, according to unidentified sources with knowledge of the matter. The federal government would ban the companies from selling chipmaking equipment in China without a license from the Commerce Department.

A similar restriction was placed on Advanced Micro Devices and Nvidia last month on shipments of AI computing chips to China.

The Commerce Department is reviewing policies toward China but could not comment on the broadening of export curbs, the agency’s spokesperson said in a statement. The new rules, which have yet to be finalized, would be aimed at preventing “China’s acquisition and use of U.S. technology in the context of its military-civil fusion program to fuel its military modernization efforts, conduct human rights abuses, and enable other malign activities.”

This move would be the latest of President Biden’s efforts to fortify U.S.’s tech leadership and yet another sign of the mounting tension with China over advanced technology that could create national security problems.

In August, Biden signed the CHIPS Act, a landmark investment in domestic semiconductor manufacturing. The legislation pumps $52 billion in incentives to spur the local chip industry and reduce import reliance on semiconductors for cars, personal gadgets, and more. It could also prove vital in boosting U.S. competitiveness against China and other Asian countries on the research and development front. In recent years, the U.S. share of microprocessor chip production has dropped from 40% to 10% to12%, according to Commerce Secretary Gina Raimondo.

Congress may revisit the outbound investment review process that was not included in last month’s CHIPS and Science Act. This provision would have subjected some foreign investments made by U.S. companies to screening by an interagency committee to limit technology transfer to China.

The U.S. crackdown on Chinese companies’ access to chipmaking technology has been ongoing for a few months now. Early last month, Reuters reported that the Biden administration was considering curbing China-bound memory chips shipments, including Yangtze Memory Technologies. The ban has not been made official yet.

Even last week, Raimondo reiterated national security as a priority when considering foreign expansion. “We’re going to be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security… they’re not allowed to use this money to invest in China, they can’t develop leading-edge technologies in China…. for a period of ten years,” the U.S. Commerce Secretary said regarding the CHIPS Act in a press briefing.

The chipmaking industry has witnessed shortages for many years, compounded by the war in Ukraine. Russia and Ukraine are among the largest exporters of krypton, a gas used to produce chips. Rising inflation has caused consumers to hold back on spending on smartphones, laptops etc.