Report: US rule blocking export of chipmaking tech to China impacts M'sia

An exclusive report by Reuters has indicated that the Joe Biden administration will unveil a new rule next month expanding US power to stop exports of semiconductor manufacturing equipment from some foreign countries to China’s chipmakers.

While US allies like Japan, the Netherlands and South Korea will be excluded from the rule, the report stated that affected countries would include Israel, Taiwan, Singapore and Malaysia.

The rule is an expansion of the US’ Foreign Direct Product rule and when it takes effect, would bar about half a dozen key Chinese semiconductor fabrication factories from receiving exports from many countries.

The Foreign Direct Product rule means that if a product is made using American software or technology, the US government has the power to stop it from being sold - including products made in a foreign country.

Reuters quoted two unnamed sources in breaking the news which has led to a surge in share prices for major chip equipment manufacturers such as ASML and Tokyo Electron, which will not be affected.

“The US Commerce Department is continually assessing the evolving threat environment and updating our export controls, as necessary, to protect national security and safeguard our technological ecosystem.

“We remain committed to working closely with our allies who share our values,” a department spokesperson said.

Chinese Foreign Ministry spokesperson Lin Jian responded by saying that US efforts to coerce other countries into suppressing China’s semiconductor industry undermines global trade and hurts all parties.

“Containment and suppression cannot stop China’s development, but will only enhance China's determination and ability to develop its scientific and technological self-reliance,” he said.

Previously the US had imposed export controls on advanced chips and chipmaking equipment for China in 2022 and 2023, before going on to secure a deal for Japan and the Netherlands to also restrict semiconductor manufacturing tools to China.

The three countries dominate the production of advanced chipmaking equipment.

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