US plans to limit chip technology access for allies’ factories in China

The United States is getting ready to tighten rules on chip-making companies from allied countries that have factories in China. According to a recent report, a U.S. official has told major semiconductor firms, including Samsung, SK Hynix, and Taiwan Semiconductor Manufacturing, that the government may cancel special permissions. These permissions currently let them use American technology to produce chips in China.

This move is part of a larger effort to protect U.S. technology from being used in ways that could harm national security. The Biden administration has been working to limit China’s access to advanced tech, especially for military purposes. By ending these waivers, the U.S. aims to make it harder for companies to send American tools and know-how to their Chinese plants. The decision could affect global chip production since these companies make a large share of the semiconductors used worldwide.

It might also strain relationships with allies like South Korea and Taiwan, who rely on their Chinese factories for business. However, the U.S. believes this step is necessary to stay ahead in the global tech race. Stock markets reacted to the news, with shares of chip companies like Nvidia, Taiwan Semiconductor, and AMD dropping on Friday.

Investors are worried about how these changes could disrupt the industry. The U.S. Department of Commerce is leading this effort, and talks with affected companies are ongoing. This policy shift shows the U.S. is serious about controlling the flow of its technology abroad.