The U.S. government has escalated its restrictions on artificial intelligence (AI) chip exports and semiconductor technologies, aiming to curb China’s access to advanced computing power. The latest measures expand trade blacklist sanctions, impose stricter licensing requirements for AI chips, and put renewed pressure on global semiconductor suppliers to cut off China’s access to key technologies.
As part of this expansion, the U.S. Commerce Department has added dozens of Chinese entities to its export control list, including six subsidiaries of the Inspur Group. These companies are now subject to strict licensing requirements, with approvals expected to be highly limited. According to officials, these measures are intended to prevent China from using high-performance AI hardware in military and surveillance applications.
The revised regulations also target semiconductor manufacturing tools, blocking access to both extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography machines.
The Netherlands-based ASML, the world’s leading supplier of EUV tools, has already been barred from selling its most advanced equipment to China. Now, U.S. officials want to prevent ASML from servicing older DUV lithography machines still in use at Chinese semiconductor fabrication plants.
These additional service restrictions could significantly hamper China’s ability to maintain and upgrade its domestic chip production capabilities.
The changes build upon prior restrictions introduced under the Biden administration, including the AI Diffusion Rule, which originally sought to limit China’s access to high-performance AI chips. However, these latest actions significantly expand enforcement efforts and widen the scope of restricted technologies.
Tech Industry Pushes Back Against AI Chip Curbs
Leading U.S. technology firms have strongly criticized the expanded restrictions, warning that these policies could weaken the domestic semiconductor industry while failing to halt China’s AI advancements.
Microsoft has been particularly vocal in opposing the new controls. “AI will continue to spread globally. No single country, including the United States, can stop this,” said Brad Smith, Microsoft Vice Chair and President. “The question is not whether AI will spread, but whether the United States and its closest allies will remain at the forefront of its development.”
Nvidia, the dominant manufacturer of AI accelerators, has also raised concerns. The company had previously developed modified AI chips—the A800 and H800—to comply with earlier export rules. However, under the updated policy, these versions may now require additional licensing, severely limiting their availability in China.
The Semiconductor Industry Association (SIA) has warned that overly restrictive regulations could disrupt global supply chains and weaken U.S. competitiveness. Nvidia has echoed this concern, stating that the government’s aggressive stance could push China to accelerate domestic AI chip development, potentially reducing reliance on American technology.
China Accelerates Self-Sufficiency Amid U.S. Sanctions
China is responding to these restrictions by intensifying efforts to develop its domestic semiconductor industry. Huawei, one of the country’s leading tech firms, has partnered with Semiconductor Manufacturing International Corporation (SMIC) to manufacture AI chips domestically.
Despite losing access to advanced Western chipmaking tools, Huawei developed the Kirin 9000S processor, using a 7nm fabrication process—a technological breakthrough achieved without access to EUV lithography machines. Instead, the company relied on deep ultraviolet (DUV) lithography, a workaround that is costlier and less efficient but still enables some semiconductor progress.
In a countermeasure against U.S. sanctions, Beijing has restricted exports of critical materials such as gallium and germanium, which are essential for semiconductor manufacturing. This move threatens to disrupt Western tech supply chains, particularly in the United States, Japan, and Europe.
Chinese companies have also sought alternative supply routes, with some reportedly acquiring U.S. chips through intermediaries in third-party nations. The Chinese government has additionally funneled $47.5 billion into its domestic semiconductor industry to reduce reliance on foreign technology.
Global Fallout and the Future of Semiconductor Policy
The tightening of U.S. export controls is having far-reaching consequences beyond just China. The Biden and Trump administrations have both worked to pressure U.S. allies, particularly Japan and the Netherlands, to enforce stricter trade restrictions against China.
For instance, Washington has lobbied Dutch semiconductor giant ASML to cease maintenance and servicing of DUV lithography machines used in China. While ASML has already been barred from selling its latest EUV machines to Chinese firms, the Trump administration is now pushing for expanded enforcement.
Meanwhile, Japan has imposed new export controls on semiconductor materials, aligning itself more closely with U.S. policy. However, concerns remain that if Japan and the Netherlands fully comply, China’s semiconductor sector could face a substantial setback, while non-U.S. chip suppliers may benefit from Beijing’s search for alternative vendors.
At the same time, some U.S. officials have called for greater cooperation with China in AI development, acknowledging that a total decoupling of AI and semiconductor trade may not be feasible. On March 24, the head of the U.S.-China Relations Committee emphasized the need for some level of collaboration, despite rising tensions.
The U.S. Commerce Secretary has emphasized the importance of working with U.S. industry leaders to ensure that China cannot circumvent AI chip restrictions.
While Washington remains firm in its goal of maintaining technological dominance, critics argue that the aggressive trade policies may backfire by accelerating China’s independence in semiconductor production. If China successfully develops its own AI chips and chipmaking tools, the long-term influence of U.S. export controls could be diminished.
For now, both the U.S. and China appear locked in an escalating technological standoff, with no signs of de-escalation. As new restrictions take effect and China seeks alternative solutions, the global semiconductor landscape is poised for further disruption.
