On July 31, Reuters exclusively reported, citing two informed sources, that the Biden administration plans to further tighten restrictions on chip exports to China and will issue a new regulation in August. This new regulation will expand the U.S.'s authority to block certain countries from exporting semiconductor manufacturing equipment to Chinese chip manufacturers. One of the sources stated that the new regulation is an extension of the "Foreign Direct Product Rule" (FDPR), allowing the U.S. to directly control foreign-manufactured products. It lowers the threshold for when foreign products become subject to U.S. controls based on U.S. component content. This means that any foreign-manufactured chip equipment using even a small amount of U.S. technology will be subject to U.S. export controls, further closing the loopholes in the FDPR.
Reportedly, the countries and regions whose exports will be affected include Israel, Taiwan, Singapore, and Malaysia. Approximately six Chinese chip manufacturing plants will be banned from importing chips from countries or regions affected by U.S. regulations. Additionally, the U.S. plans to add about 120 Chinese entities to its restricted trade list, including the six chip manufacturing plants, tool manufacturers, EDA (Electronic Design Automation) software providers, and related companies. However, sources noted that U.S. allies that export key chip manufacturing equipment, such as Japan, South Korea, and the Netherlands, will be excluded from the new regulations. Furthermore, more than 30 other countries classified under the A:5 group in the U.S. diplomatic and security relations category have been granted exemptions from the new regulations. The sources indicated that the planned new regulations are still in draft form and may undergo adjustments, but they are scheduled to be released next month.
