Biden Administration Extends China Chip Curbs to Macau

Smartphone chip component circuits are handled by a worker at the Oppo factory in Dongguan, on May 8, 2017. NICOLAS ASFOURI/AFP via Getty Images

Concerned over high-end chips and chip manufacturing equipment falling into the hands of Beijing through Macau, the Biden Administration has extended its strict chip export restrictions to Macau.

In October 2022, The U.S. government announced the strictest chip export restrictions on China. On Jan. 17, the Biden administration further imposed the same export restrictions on Macau, one of China’s special administrative regions.

The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce announced in the Jan. 17. Federal Register that the latest export restrictions against Macau would not affect its status; Macau will remain a separate destination from China.

BIS adopts additional export controls on advanced computing integrated circuits (I.C.s). Computer goods containing such I.C.s or specific semiconductor manufacturing projects will be restricted.

The latest update also modifies the Export Administration Regulations (EAR) to restrict certain specific activities of U.S. persons. It prohibits “Americans” from supporting mainland Chinese factories to develop or produce advanced chips without permission.

Former U.S. Department of Commerce official and partner of Akin Gump Strauss Hauer & Feld LLP, Kevin Wolf, told the Wall Street Journal that “Americans” includes persons with U.S. passports, green cards, and American companies.

In its latest announcement, BIS mentioned that by expanding the export control measures from China to Macau, the United States would achieve its policy goals in previous regulations more effectively.

BIS elaborated that the Ministry of Commerce made such a decision deemed it “essential to protect the U.S. national security and foreign policy interests” from falling into the hands of the CCP.

CCP Threat to Taiwan

The increasing military threat of the CCP on Taiwan and its aggressive, provocative tactics in the South China Sea have prompted the United States to strengthen its vigilance against the regime and mark it as the number one threat.

Advanced computing chips are essential for developing high-precision weapons. In recent years, Beijing has invested heavily in pushing chip development in China.

However, most of the global chip technology comes from the United States.

To prevent the Chinese government from obtaining high-end chips to enhance its scientific and technological applications, such as military modernization, artificial intelligence (A.I.), and supercomputers, the United States is cutting off Beijing’s access to chip technology through export controls.

In October 2022, when the United States announced the chip export restrictions on China, the U.S. Department of Commerce officials explained, “we believe that some sophisticated data processing systems, which rely on U.S. chips, software, tool technology, contribute to the military modernization (of China), including the development of weapons for mass destruction such as nuclear weapons.”

U.S. Government officials also warned that these supercomputers’ capabilities are also being used for other activities that seriously threaten its national security. By imposing controls and restrictions on such items, the U.S. government minimizes Beijing’s access to advanced computing systems to conduct large-scale surveillance and tracking of people without regard for its violation and abuse of human rights.

Biden Meets with Dutch Prime Minister

U.S. President Joe Biden met with Dutch Prime Minister Mark Rutte at the White House on Jan. 17. There are concerns about whether the Netherlands will cooperate with the United States to increase restrictions on exporting chip equipment to the CCP.

According to the latest information, Biden praised the Netherlands’ efforts in assisting Ukraine and stressed that the two countries should strengthen their cooperation and jointly tackle the threats by the CCP.

The U.S. is seeking support from the Dutch government and Dutch company ASML.

Dutch political program Nieuwsuur interviewed Rutte after he visited the White House.

Rutte said that the Dutch and American governments are progressing with the relevant discussions of imposing chip export restrictions on China. He believes that the Netherlands and the United States will be able to achieve good results in joining forces together.

The two governments also revisited the United States request to the Netherlands to adopt the Biden administration’s restrictions on China imposed in October 2022, the agenda is to hinder the development of China’s chip manufacturing industry and slow down its technological advancement and export of military modernization. But neither disclosed the details of the negotiation.

Dutch Prime Minister Mark Rutte said Western countries could not lose their leading position in advanced semiconductor technology; it is vital that any “undesirable countries” not be able to utilize advanced chips for military purposes.

He said the Dutch government is continuing discussions with the United States and other government partners, but “The global supply chain of relatively simple technology should not be interrupted by export restrictions.”

The U.S. imposing export restrictions on high-end chips and chip manufacturing equipment to China is to prevent the CCP from using advanced semiconductors for manufacturing advanced weapons, improving surveillance capabilities while disregarding human rights.

The Dutch technology giant ASML is the leading global supplier of chip-manufacturing lithography machines, and China is the largest client of ASML.

In 2021, 15 percent of ASML sales came from China.

If the Netherlands follows the new regulations of the U.S. government, its total sales worth about 2 billion euros ($2.2 billion) may be affected.

Politico reported that ASML has not yet sold any extreme ultraviolet lithography machines (EUVs) to Beijing. Still, the Dutch government is unclear whether it will further restrict exports of semiconductor-related equipment to China.

Biden Meets with Japanese Prime Minister

On Jan. 13, 2023, Biden met with Japanese Prime Minister Fumio Kishida at the White House. The U.S. also urged Japan to tighten its chip export restrictions against Beijing.

Pat Gelsinger, CEO of Intel, said in an interview with CNN at the World Economic Forum (WEF) on Jan. 17. that the location of oil reserves defined geopolitics in the past 50 years. But in the next 50 years, global politics will be dominated by microchips’ availability, trade, and investment.

Frank Xie Tian, a professor at Aiken School of Business Administration at the University of South Carolina, pointed out that an undivided alliance among the United States, Japan, and the Netherlands will completely cut off China’s ambition for chip development.

The professor explained, “If China wants to develop chip technology on its own, I am afraid it is not a matter of one or two years or five or ten years, but a much longer period of time, and it may never be done.”

However, according to a recent report, the Chinese University of Hong Kong, in conjunction with Carnegie Mellon University, has developed a multi-material 3D nanofabrication platform. In the future, the researchers aim to build functional nanodevices, including nanocircuits.