The Trump administration is ramping up efforts to tighten restrictions on China’s semiconductor industry, building on measures implemented during Joe Biden’s presidency. Officials are actively engaging key allies, Japan and the Netherlands, to align their policies with U.S. regulations that limit American chipmakers like Lam Research, KLA Corp., and Applied Materials Inc. from servicing Chinese firms.
Coordinating Global Efforts
Recent meetings between U.S. officials and their Japanese and Dutch counterparts focused on further restricting Tokyo Electron Ltd. and ASML Holding NV from maintaining chipmaking equipment in China. The goal is to match existing U.S. restrictions and hinder Beijing’s ability to develop advanced AI and military applications.
Targeting Nvidia’s Exports
In addition to limiting the maintenance of semiconductor equipment, some officials aim to restrict the export of Nvidia’s chips to China. The previous administration placed controls on certain AI chips, but the new administration is considering further tightening these restrictions. The announcement led to a 4.4% drop in Tokyo Electron’s shares, highlighting the impact of the policy on global markets.
Halting China’s Chip Industry Growth
The broader objective in Washington is to prevent China from advancing its domestic semiconductor industry. Under Biden, ongoing discussions were about curbing ChangXin Memory Technologies Inc. (CXMT) from accessing American technology, an effort now being revived under Trump. Additionally, restrictions on Semiconductor Manufacturing International Corp. (SMIC), Huawei’s main chip supplier, are under review to prevent any loopholes that might allow restricted facilities to acquire necessary tools.
Reviewing Biden’s AI Diffusion Rule
Another priority for the Trump administration is revisiting the AI diffusion rule, introduced in Biden’s final week in office. The rule classifies countries into three tiers and establishes thresholds for AI computing power exports. Tech giants like Nvidia have criticized the regulation, with CEO Jensen Huang hoping for a lighter regulatory touch under Trump. However, reports indicate the new administration may seek to strengthen and streamline the rule rather than ease restrictions.
Adjusting Export Thresholds for AI Chips
Under current regulations, chipmakers can notify the government before exporting up to 1,700 GPUs to most countries. Trump officials are pushing to reduce this threshold, effectively increasing the number of AI chip sales requiring government approval. This change would significantly expand the scope of U.S. semiconductor export controls.
Future Implications and Global Responses
It remains to be seen whether U.S. allies will fully cooperate with the proposed semiconductor restrictions. A previous handshake agreement between the U.S. and the Dutch government on limiting maintenance services in China fell apart after Trump’s election victory. Meanwhile, Chinese semiconductor firms like SMIC are expecting further government support to counteract these measures.
The semiconductor battle between the U.S. and China is escalating, with Trump’s administration doubling down on strategies that originated under Biden. As Washington refines its policies, global chipmakers and AI developers must prepare for further restrictions impacting the tech industry worldwide.
