U.S. Vies With Allies and Industry to Tighten China Tech Controls

The Biden administration is fighting to overcome opposition from allied nations and the tech industry as it prepares to expand restrictions aimed at slowing China’s ability to make the most advanced semiconductors, which could be used to bolster Beijing’s military capacity.

The administration has drafted new rules that would limit shipments to China of the machinery and software used to make chips from a number of countries if they are made with American parts or technology, as well as some types of semiconductors, according to people who have seen or were briefed on a draft version of the rules.

The rules are aimed at blocking off some of the newer routes that Chinese chipmakers have found to acquire technology, despite international restrictions.

The United States has been pushing allies like Japan and the Netherlands to toughen their restrictions on technology shipments to China, during visits to those countries as well as a Japanese state visit to Washington in April. Those nations are home to companies that produce chip-making machinery, like ASML Holding N.V. and Tokyo Electron Limited. But industry in the United States and other countries has argued the rules could hurt them, and it remains unclear when or if foreign governments will issue limitations.

In the meantime, some of the rules that the United States plans to impose would have significant carve-outs, the people said. The rules blocking shipments of equipment to certain semiconductor factories in China would not apply to more than 30 allied countries, including the Netherlands, South Korea and Japan.

That has sparked pushback from U.S. firms, who argue that the playing field will be further tilted against them if the U.S. government stops their sales but not those of their competitors.