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US Tightens Grip on Chip Exports to China amid Growing AI Semiconductor Market

The new US semiconductor export rules, in line with Dutch and Japanese norms, restrict photolithography tool access and fix AI chip export loopholes.


The United States government plans to revise its export restrictions on semiconductor technology to China, according to reports on Tuesday. This move aims at strengthening controls over tools used in chip manufacturing, including the chips utilized in Artificial Intelligence (AI). These regulations, set to match up with the more recent Dutch and Japanese rules, would limit access to chip-making tools such as photolithography equipment and aim at wrapping up a few loopholes in export restrictions on AI processing chips.

This update of rules comes nearly a year after export restrictions were first imposed. The US Department of Commerce has been working towards refreshing these regulations, some reports suggest. The US has allegedly given China an early indication of the forthcoming changes in restrictions to avoid any potential souring of relations between Washington and Beijing.

Tightened Restrictions on Chipmaking Tools

Changes have also been made by the Dutch government on the export restrictions. Controls on exporting extreme ultraviolet light (EUV) systems were extended to require export licenses for some of the less-advanced Deep Ultraviolet (DUV) lithography systems. Liabilities imposed on some of the less advanced DUV systems can potentially limit China’s advancements in the semiconductor industry.

Although China’s domestic semiconductor industry took pride in Huawei’s announcement of the Huawei Mate 60 Pro 5G smartphone using domestically made chips recently, the country is still considered to be a few years away from mass-producing 7nm silicon. According to the South China Morning Post, not a single Chinese chipmaking production line has been outfitted with a Chinese-made lithography system. Most of these domestically produced systems are used solely for academic research purposes.

Potential Influence on Global Semiconductor Dynamics

In this rapidly changing geopolitical landscape, The International Data Corporation (IDC) predicts that China’s share in the overall semiconductor market will continue to increase despite these challenges. By 2027, China is expected to have 29% of the total market share, which is an increase of 2% from current levels. This growth, however, will likely be driven by the use of more mature production processes.

In the same timeframe, Taiwan’s share in the semiconductor market is expected to decline, which would be balanced by an increase in the US share of semiconductor production at 7nm and below to roughly 11% by the year 2027. Simultaneously, various semiconductor companies are shifting focus from China to invest heavily in Southeast Asia, with countries like Malaysia and Vietnam playing a pivotal role in the global semiconductor assembly and test market.

Markus Kasanmascheff
Markus Kasanmascheff
Markus is the founder of WinBuzzer and has been playing with Windows and technology for more than 25 years. He is holding a Master´s degree in International Economics and previously worked as Lead Windows Expert for Softonic.com.

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