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The Biden administration reportedly plans to stop the export of semiconductor manufacturing equipment to China from the U.S. and other foreign nations, but the list will exclude certain U.S. allies (Bloomberg, subscription). 
 
What’s going on: “The rule, an expansion of what is known as the Foreign Direct Product rule, would bar about half a dozen Chinese semiconductor fabrication factories, or fabs, at the center of China’s most sophisticated chipmaking industry from receiving exports from many countries, according to one of the sources.”

• Shipments from key chipmaking-equipment exporters—including Japan, South Korea, the Netherlands and more than 30 other countries—would be exempt, however.

The background: In 2022 and 2023, the U.S. imposed controls to prevent U.S.-based companies from exporting advanced chips and chipmaking equipment to China, to block supercomputing and artificial intelligence advancements by that country.

Questions remain: The Biden administration’s reported decision to impose controls on manufacturers in the U.S., Taiwan, Malaysia and other countries but not manufacturers in Japan, South Korea and the Netherlands raises questions about whether the rule would achieve its national security objectives, as the targeted Chinese firms would still be able to purchase goods from countries not subject to the controls.