The United States is moving forward with expanded restrictions on China’s semiconductor industry, reinforcing its efforts to curb Beijing’s access to advanced chipmaking technology.
The Trump administration is continuing Biden-era semiconductor policies but is seeking more aggressive measures, including tighter controls on AI chip exports and blocking servicing of key semiconductor equipment inside China.
U.S. officials have been in talks with Japan and the Netherlands to stop maintenance services for semiconductor fabrication tools used by Chinese firms. Meanwhile, Nvidia could face stricter export controls, and potential new sanctions are under discussion against leading Chinese chipmakers such as ChangXin Memory Technologies (CXMT) and Semiconductor Manufacturing International Corporation (SMIC).
OpenAI previously voiced concerns that China is actively seeking access to restricted AI hardware. The company has called for stricter oversight, stating, “Seizing the moment and building the infrastructure needed to produce enough energy and chips to drive down the cost of compute and make it abundant will create widespread economic opportunity.” OpenAI has urged U.S. policymakers to take a more proactive stance in limiting AI-related exports.
U.S. Pressures ASML and Tokyo Electron to Halt Semiconductor Equipment Servicing in China
The Netherlands and Japan are central to Washington’s latest push to restrict China’s semiconductor capabilities. Dutch company ASML has long been prohibited from selling its extreme ultraviolet (EUV) lithography machines to China, but its deep ultraviolet (DUV) tools—still critical for semiconductor production—are widely used by Chinese chipmakers.
The U.S. wants to block ASML from servicing these machines, arguing that cutting off maintenance will degrade China’s chipmaking capacity over time.
Although the Biden administration had reached an informal agreement with the Dutch government to limit ASML’s servicing operations in China, the deal was never fully enforced. The Trump administration is now pushing for these restrictions to be formalized.
At the same time, U.S. officials are lobbying Japan to restrict Tokyo Electron’s servicing of chipmaking equipment used in Chinese fabs. While Tokyo has already imposed some export controls, Washington wants additional measures to ensure China cannot receive ongoing technical support for its semiconductor production.
Nvidia AI Chip Exports Could Face Further Restrictions
The U.S. previously blocked Nvidia’s A100 and H100 AI chips from being sold to China, leading the company to develop alternative versions—A800 and H800—to comply with the regulations. These variants have lower bandwidth compared to the original A100/H100 models.
Now, U.S. officials are evaluating whether to lower the computing power threshold that determines whether an AI chip requires an export license. If implemented, this would subject Nvidia’s modified models to the same strict licensing requirements.
There is also a proposal to reduce the number of AI chips that can be exported in a single shipment before requiring government approval. Industry analysts suggest this could affect Nvidia’s global supply chain, making it more difficult to ship large volumes of chips without navigating complex regulatory processes.
Nvidia has expressed concerns that stricter U.S. chip export controls could accelerate China’s domestic semiconductor development efforts, warning that such policies may ultimately hurt American chipmakers while strengthening Chinese rivals.
Biden’s AI Diffusion Rule Under Review
One of the last policies introduced under the Biden administration was the AI diffusion rule, which created a tiered system limiting AI chip exports based on computing power. The regulation divides countries into security classifications, restricting high-performance AI chips from being sent to nations where they could be used for military or surveillance applications.
The Trump administration is now reviewing whether this framework should be strengthened. Some officials argue that the rule requires expanded enforcement mechanisms, as China is suspected of acquiring high-performance AI chips through indirect channels.
New Sanctions on Chinese Semiconductor Firms Under Consideration
Beyond AI chip restrictions, the Trump administration is considering placing additional Chinese semiconductor firms on the U.S. trade blacklist. One of the primary targets is ChangXin Memory Technologies (CXMT), a leading domestic DRAM manufacturer that is vital to China’s semiconductor strategy.
The Biden administration had previously debated blacklisting CXMT but opted against it, partly due to concerns from Japan, which maintains a significant business relationship with global memory chip markets.
Another key company under scrutiny is Semiconductor Manufacturing International Corp. (SMIC), China’s largest contract chipmaker. While SMIC has been under partial U.S. restrictions since 2020, the current system allows case-by-case licensing for certain semiconductor manufacturing tools.
Trump officials are now assessing whether to tighten these restrictions further or impose a blanket ban, preventing SMIC from accessing any U.S. technology regardless of end-use certification.
China’s Strategy to Counter U.S. Semiconductor Sanctions
As Washington moves to tighten semiconductor restrictions, China has been expanding its domestic production efforts. One of the most visible signs of this shift came with Huawei and SMIC’s development of the Kirin 9000S processor, manufactured using an estimated 7nm process.
This chip, produced despite U.S. export controls, demonstrated that China is progressing in its semiconductor capabilities even without access to advanced lithography machines.
China’s government has ramped up investments in semiconductor research, prioritizing AI chip development and domestic memory production to replace restricted Western alternatives. However, industry analysts believe that while China has made strides, its semiconductor sector still faces significant obstacles, particularly in high-end fabrication equipment and AI chip design.
Washington is closely monitoring these developments, as any evidence that China is successfully bypassing U.S. restrictions could lead to further regulatory actions. Recent discussions suggest that U.S. officials may expand existing sanctions to cover third-party resellers suspected of redirecting restricted AI chips to Chinese entities.
Future Outlook: Escalation or Strategic Adjustments?
Trump’s approach signals that semiconductor policy will remain a core aspect of U.S.-China trade tensions. While Biden’s administration had implemented key measures to limit China’s access to chip technology, Trump officials appear intent on strengthening enforcement mechanisms and closing existing loopholes.
One potential flashpoint is whether Japan and the Netherlands will fully comply with U.S. pressure. While both countries have cooperated with previous export restrictions, ASML has resisted fully cutting off maintenance support for DUV lithography machines, citing business interests.
If these governments impose new servicing bans, China’s semiconductor industry could face additional supply chain disruptions.
Another area of focus will be enforcement against indirect chip acquisitions. The Biden administration had already restricted Nvidia’s AI chip exports to China and certain Middle Eastern nations, concerned that restricted technology was being rerouted. Trump officials may expand these policies, placing additional pressure on third-party countries facilitating semiconductor sales to China.
China’s response to these actions will be crucial. Beijing has previously imposed countermeasures, including export restrictions on rare earth metals vital to semiconductor manufacturing. If U.S. sanctions expand further, China may retaliate by targeting key components needed for Western tech industries.
