(Bloomberg) -- The Biden administration announced new restrictions on China's access to US semiconductor technology, adding measures aimed at stopping Beijing's push to develop its own chip industry and advance the country's military capabilities.
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The Commerce Department added more names to a list of companies that it regards as "unverified," meaning it doesn't know where their products end up being used. The 31 additions are all Chinese. That means US suppliers will face new hurdles in selling technologies to those entities.
The move is the next step in trying to break the link between Chinese companies and their country's military and security apparatus. That conduit is seen as a possible backdoor allowing China to update its military and surveillance capabilities using US technology.
The Semiconductor Industry Association, a lobbying group representing all of the largest US chipmakers, said it's evaluating the impact of the new export controls and will ensure compliance with the restrictions. "We understand the goal of ensuring national security and urge the US government to implement the rules in a targeted way - and in collaboration with international partners - to help level the playing field and mitigate unintended harm to US innovation," the association said in a statement.
Anyone receiving the unverified designation has to submit to checks on where their products go and, while that process is ongoing, anyone who supplies them with US technology will be required to go through extra certification steps related to the use of the products.
Successfully proving they're not breaking rules allows the companies to be removed from the list. Not doing so -- or failing to cooperate -- risks putting them on the so-called entity list, meaning that all exports to them of US technology are subject to prior approval by the Commerce Department.
Bloomberg reported this week that the administration was readying new restrictions, part of a broader strategy that also includes bolstering domestic chip production. Earlier this year, Biden signed a bill that promises to infuse about $52 billion into the US semiconductor industry.
A sustained rally in chip stocks hasn't materialized. Financial disclosures from Samsung Electronics Co. and Advanced Micro Devices Inc. this week indicated a slowdown in future sales. The Philadelphia Stock Exchange Semiconductor Index is down 39% this year and fell as much as 4.4% on Friday.
(Updates with context in the last paragraph.)
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