The Trump administration is exploring more stringent restrictions on semiconductor technology exports to China, building upon measures initiated by the Biden administration to curb Beijing’s technological advancement, Bloomberg reports.
This new approach includes pressuring key allies to strengthen their own limitations on China’s chip industry.
Sources familiar with the matter indicate that Trump administration officials recently engaged with counterparts in Japan and the Netherlands, urging them to restrict the ability of engineers from Tokyo Electron Ltd. and ASML Holding NV to maintain semiconductor manufacturing equipment within China. This aligns with a goal shared by the Biden administration: to encourage allies to match the export restrictions the US has placed on American chip-gear companies like Lam Research Corp., KLA Corp., and Applied Materials Inc.
According to sources, these discussions are taking place alongside preliminary talks within Washington about potential sanctions targeting specific Chinese companies. Bloomberg News previously reported that some Trump officials are also seeking to further limit exports of certain Nvidia Corp. chips to China, requiring licenses for a wider range of products. The administration is also reportedly considering tightening existing curbs on the overall quantity of AI chips that can be exported globally without a license. These deliberations are ongoing and confidential, according to individuals familiar with the discussions.
News of these potential restrictions has already impacted the stock market, with shares in Japanese chip firms declining following the Bloomberg report. Tokyo Electron experienced a significant drop of 4.4%.
The overarching objective in Washington is to prevent China from developing a robust domestic semiconductor industry that could bolster its artificial intelligence and military capabilities. While Trump appears to be continuing efforts begun under Biden, his administration may be seeking to achieve what its predecessor could not, including securing agreements with allies and adopting more aggressive strategies previously advocated by hawkish members of Biden’s team.
However, implementation of new US regulations could take months as Trump fills key positions at federal agencies. The willingness of allies to cooperate also remains uncertain. The previous administration had reached a preliminary agreement with the Netherlands to limit equipment maintenance in China, but the Dutch government reportedly hesitated after Trump’s election. Regular maintenance and servicing are critical for the functionality of sophisticated chip-making equipment from companies like ASML.
Biden’s team reportedly passed on several priorities to Trump’s national security council, including a proposal to block Chinese memory chipmaker ChangXin Memory Technologies Inc. (CXMT) from purchasing American technology. The Biden administration seriously considered this measure but ultimately decided against it due to opposition from Japan.
Some officials within the Trump administration are also pushing for intensified restrictions on Semiconductor Manufacturing International Corp. (SMIC), the main chipmaking partner of Chinese telecom giant Huawei Technologies Co. Although the Biden administration blocked shipments to certain SMIC facilities, it allowed case-by-case reviews for others, a policy that some officials fear could enable SMIC to acquire tools ultimately used at restricted plants. Following initial losses, SMIC’s shares in Hong Kong rebounded, gaining as much as 2.7%, partially fueled by expectations of support from Beijing.
The new administration is also considering curbs on sales of Nvidia-designed chips specifically for China. According to sources, some members of Biden’s National Security Council advocated for these stricter measures before leaving office, but then-Commerce Secretary Gina Raimondo opposed them.
Finally, the future of the “AI diff usion rule,” implemented in the final days of the Biden administration, is under review. This regulation divides the world into three tiers and sets maximum thresholds for AI computing power that can be exported to each. Companies, including Nvidia, have criticized the rule, with CEO Jensen Huang expressing optimism that the Trump administration might adopt a less restrictive approach.
The White House is exploring ways to streamline and strengthen the AI diffusion rule, although specific changes are still being considered. One potential proposal would be to reduce the computing power threshold that triggers the need for an export license. Currently, chipmakers are only required to notify the government before exporting the equivalent of up to 1,700 graphic processing units to most countries.
