The United States has implemented its most significant restrictions yet on China’s access to advanced semiconductor technologies, banning the export of high-bandwidth memory (HBM) chips to Chinese entities without special authorization.
The Wall Street Journal reports that the new measures also add 140 Chinese organizations to the US trade blacklist, further limiting China’s ability to obtain cutting-edge AI and military hardware.
“These new rules are groundbreaking and sweeping,” said Commerce Secretary Gina Raimondo, emphasizing their importance in countering China’s technological ambitions. The ban focuses on preventing the misuse of advanced semiconductors in AI and defense applications, a strategy designed to maintain US leadership in critical technologies.
HBM: A Critical Asset in AI Systems
HBM, or high-bandwidth memory, is a high-speed memory technology critical to AI and high-performance computing. Unlike traditional memory, HBM uses a stacked architecture to deliver faster data transfers and lower energy consumption, making it a key component for training AI models and executing high-demand computational tasks.
Major producers of HBM include Samsung Electronics and SK Hynix of South Korea, along with US-based Micron Technology.
The export ban prevents these companies from supplying their latest HBM chips to Chinese firms without explicit approval. However, loopholes exist. Gregory Allen, director of the Wadhwani AI Center at the Center for Strategic and International Studies, noted, “Certain older versions of high-bandwidth memory chips may remain available to Chinese customers, and not every semiconductor manufacturing facility linked to Huawei was included on the trade blacklist.”
Related: Stuck at 7nm: Huawei’s Chip Ambitions Stumble as U.S. Sanctions Bite Hard
Huawei Grapples with Production Challenges
Huawei Technologies Co. remains at the center of US sanctions. Since being cut off from Taiwan Semiconductor Manufacturing Co. (TSMC) in 2020, Huawei has relied on domestic producer Semiconductor Manufacturing International Corporation (SMIC) for its chip needs. However, SMIC lacks the extreme ultraviolet (EUV) lithography technology needed for sub-7nm chip production, forcing Huawei to rely on older deep ultraviolet (DUV) methods.
The lack of EUV access has significantly impacted Huawei’s competitiveness in AI hardware. Huawei’s Ascend 910B chip, for example, achieves around 80% of Nvidia’s A100 performance in certain benchmarks but falls far short of Nvidia’s cutting-edge Blackwell GPUs. The sanctions left Huawei unable to access the high-end manufacturing capabilities of TSMC, a critical setback for its AI ambitions.
To compensate, Huawei has employed quadruple patterning, a technique that mimics the finer detail of EUV lithography using DUV. While effective for maintaining 7nm production, the process is expensive and less efficient, highlighting the limitations of China’s domestic semiconductor industry.
Related: Why U.S. Sanctions May Struggle to Curb China’s Tech Growth
TSMC Adjusts to US Regulations
Taiwan Semiconductor Manufacturing Co., the world’s leading contract chipmaker, announced in November 2024 that it would no longer process new orders for advanced chips from Chinese firms. The decision came after Canadian researchers found that Huawei’s 910B AI processor contained TSMC-manufactured components, raising concerns about potential violations of US export controls.
TSMC maintains it complies with all US regulations and has emphasized its willingness to cooperate with US authorities. “TSMC has always adhered to international trade rules and will continue to do so,” the company stated in response to the findings.
In line with US strategic priorities, TSMC is expanding its American operations. Its Arizona facilities, supported by $13 billion in CHIPS Act funding, will manufacture advanced two-nanometer chips starting in 2025. These investments are part of a broader push to reduce dependence on Asian manufacturing and bolster domestic semiconductor production.
China’s Workarounds and Domestic Push
Despite sanctions, Chinese companies like ByteDance have found ways to circumvent direct restrictions. ByteDance leases Nvidia processors through Oracle’s US-based cloud, a legal workaround that allows continued AI research. The company is also investing in a new European AI research facility, aiming to diversify its resources and access top-tier talent.
Domestically, SMIC is benefitting from a $48 billion government fund to expand chip production capabilities. However, SMIC’s reliance on older manufacturing technologies limits its ability to compete globally. China’s current chip production remains at least two generations behind industry leaders.
Related: China Establishes $47.5 Billion Fund to Boost Semiconductor Industry
Global Implications of the HBM Ban
The United States has aligned its export control measures with key allies, including Japan and the Netherlands, to ensure a unified approach to restricting China’s semiconductor capabilities.
These countries have imposed similar limitations, particularly on exporting advanced lithography equipment. However, gaps in enforcement—such as the continued availability of older HBM models—raise questions about the long-term effectiveness of these measures.
“The United States is overstretching the concept of national security, abusing export control measures, and making malicious attempts to block and suppress China,” said Chinese Foreign Ministry spokeswoman Mao Ning, adding, “These moves seriously violate the laws of market economy.”
As both nations invest heavily in maintaining their technological edge, the implications of the HBM export ban extend far beyond immediate trade impacts, potentially reshaping global supply chains and accelerating the decoupling of US and Chinese tech ecosystems.
