Targeting China’s semiconductor and AI sectors, the Biden government announced increased export restrictions, strengthening measures to offset Beijing’s technology gains. The Department of Commerce has put new restrictions on sales of high-bandwidth memory and chipmaking equipment, therefore affecting American companies including Lam Research Corp. (NASDAQ:LRCX), Applied Materials Inc. (NASDAQ:AMAT), and KLA Corp. (NASDAQ:KLAC). These limitations cover overseas activities of American businesses as well as blacklist 140 more Chinese companies accused of furthering Beijing’s semiconductor aspirations.
These steps, according to the Bureau of Industry and Security, are meant to prevent technology that can support military development of China or violate human rights. Now included on the agency’s Entity List are semiconductor fabs, tool makers, and investment companies matched with China’s advanced chip targets.
Under debate for more than a year, the new rules follow significant lobbying by worldwide semiconductor companies. While early ideas called for more stringent rules, industry companies like Tokyo Electron LTD. and ASML Holding (NASDAQ:ASML) surged last week on hopes of subdued policy.
These limitations mark the continuation of years-long trade policies meant to limit China’s capacity in semiconductor and AI growth. Later today, specifics of the penalties and the revised Entity List should be fully revealed.
This article first appeared on GuruFocus.
