Perhaps most important, the Biden administration also imposed broad international restrictions that can prohibit firms anywhere on this planet from selling chips utilized in artificial intelligence and supercomputing in China in the event that they are made with U.S. technology, software or machinery. The restrictions used what’s generally known as the foreign direct product rule, which was last deployed by former President Donald J. Trump to cripple Huawei.
One other foreign direct product rule bans a broader range of products made outside the US with American technology from being sent to twenty-eight Chinese firms which were placed on an “entity list” over national security concerns.
Those firms include Beijing Sensetime Technology Development, a unit of a serious Chinese artificial intelligence company, SenseTime. Also included are Dahua Technology, Higon, iFLYTEK, Megvii Technology, Sugon, Tianjian Phytium Information Technology, Sunway Microelectronics and Yitu Technologies, in addition to a wide range of labs and research institutions linked to universities and the Chinese government.
In a briefing with reporters, senior administration officials said the measures can be limited to essentially the most advanced chips and never have a broad industrial impact on private Chinese businesses. But they conceded that the bounds could turn out to be more restrictive over time, on condition that technology will begin to outpace the advanced technological standards spelled out in the foundations.
Industry executives say many Chinese industries that depend on artificial intelligence and advanced algorithms power those abilities with American graphic processing units, which is able to now be restricted. Those include firms working with technologies like autonomous driving and gene sequencing, in addition to the substitute intelligence company SenseTime and ByteDance, the Chinese web company that owns TikTok.
Recent limits on sales of chip-making equipment are also expected to clamp down on the operations of China’s homegrown chip makers, including Semiconductor Manufacturing International, Yangtze Memory Technologies and ChangXin Memory Technologies.
The actual impact of the restrictions will hinge on how the policy is carried out. For a lot of the measures, the Commerce Department has the discretion to grant firms special licenses to proceed selling the restricted products to China, though it said most can be denied.