More Semiconductor Restrictions

US officials announced new restrictions on semiconductor exports to China yesterday, the Biden administration's latest strategic attempt at slowing China's advanced chipmaking capacity. Leading American chipmakers Nvidia and Intel—which view China as a major source of growth—saw their shares drop over the news.

China currently leads the world in the construction of new semiconductor factories as it looks to dominate the global market for older, basic chips, which are present in nearly every consumer electronic product, from smartphones to laundry machines. The Biden administration views advanced chips—those with transistor lines smaller than 7 nanometers, 10,000 times smaller than a human hair—as so-called "force multipliers," a foundational technology key to developments in artificial intelligence, weapons systems, and quantum computing.

The latest rules expand previous restrictions by increasing scrutiny of "gray zone" chips designed to circumvent the ban, as well as prohibiting exports to China via third parties or subsidiaries. Watch how microchips are made here.