US ban on Americans aiding China chip firms narrower than feared

Washington’s restrictions on US citizens assisting China’s chip industry will be more narrowly enforced than feared, suggesting a smaller-than-expected impact on semiconductor companies doing business in the world’s second largest economy.

The rules seem to be mostly targeting US persons working in certain functions for semiconductor manufacturing equipment firms, based on a document the Bureau of Industry and Security published last Friday to clarify export control measures announced on Oct. 7. Those sweeping sanctions were introduced to keep cutting-edge chip technologies out of reach for China’s military but have amplified uncertainty around its tech industry and wrought havoc on global chip stocks.

A license is required for US persons — anyone with an American passport, green card or residency — conducting or authorizing the delivery of items used to develop or produce advanced chips at a plant in China, but not those who perform related clerical or administrative duties. The same controls apply to US persons who maintain, repair and refurbish those items, according to the document.

Foreign-born designers and engineers, along with Chinese people with overseas passports, have long played an instrumental role in the nation’s technological development. The new curbs triggered widespread concern in the country’s chip industry that US staff would be completely sidelined. Several major Chinese semiconductor firms rely on US passport holders for their top management, Bloomberg News has reported.

Chinese chipmakers like Semiconductor Manufacturing International Corp. or machinery suppliers such as Naura Technology Group Co. may still be affected, but the measures will only prevent people from performing certain functions. US personnel affiliated with China’s fast-growing chip design sector may end up unaffected — semiconductor design firms generally do not run plants or own much machinery directly.

—Bloomberg