The use of the so-called foreign direct product rule will prevent companies anywhere in the world from selling certain advanced computing chips to Chinese buyers without a U.S. government license if the companies use American technology to make the chips, according to several people briefed on the measure, who spoke on the condition of anonymity to discuss the still-unannounced plans.
The rule would apply to chips, also known as semiconductors, destined for use in supercomputers and certain artificial intelligence applications.
Additionally the administration is restricting the export to China of chip-making tools needed to make advanced semiconductors with transistors that are 14 nanometers or smaller. And it is planning to place more Chinese organizations on an export blacklist called the Entity List.
Reuters earlier reported on some of these measures, but not on the plans to use the foreign direct product rule, or FDPR.
The administration has signaled its intention to use more of its powers to curb Beijing’s efforts to harness technology to gain a global advantage militarily and economically.
“On export controls, we have to revisit the long-standing premise of maintaining ‘relative’ advantages over competitors in certain key technologies,” national security adviser Jake Sullivan said in a speech last month, alluding to China.
The approach of staying only “a couple of generations ahead” is no longer tenable, he said.
“Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible,” he said.
The foreign direct product rule is a particularly harsh trade measure because it applies to sellers beyond U.S. borders.
The rule imposes restrictions not just on chipmakers located in the United States, but on any company or factory anywhere in the world that relies on American equipment or software to make chips. There is hardly a semiconductor on the planet today that is not made with American tools or designed with software that originated in the United States.
When the United States used FDPR to deprive Huawei of semiconductors, it crippled Huawei’s production and sales.
After Russia invaded Ukraine, the United States also used FDPR to block companies around the world from selling certain semiconductors to buyers in Russia, a ban that U.S. officials say is depriving Russia’s military of vital components.
A White House spokeswoman declined to comment.
This is a developing story and will be updated.
