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Over the past two years, the United States has steadily tightened export controls on advanced computing technologies, particularly on AI chips and semiconductor manufacturing equipment—as part of a broader effort to safeguard national security and limit China’s access to critical technologies.
One of the latest developments includes new restrictions on high-purity chemicals essential to making advanced semiconductors. Many of these chemicals are now classified under the Commerce Control List (CCL) and require export licenses before they can be shipped to China.
These new rules have directly impacted major U.S. suppliers like DuPont and Entegris, which have had to pause or reassess sales to Chinese customers. Foreign suppliers in Japan and South Korea are also affected if their products involve U.S.-origin technology, triggering similar licensing requirements.
Evolution of U.S. Export Controls and Its Impact
The first wave of controls, introduced in October 2022 by the U.S. Bureau of Industry and Security (BIS), targeted advanced chips and manufacturing tools. Although chemicals were not explicitly listed at the time, some were swept in through their association with regulated machinery. By October 2023, the scope had expanded to specifically include materials and inputs used in advanced-node chip production (14nm and below).
In April and May 2024, BIS issued further clarifications, adding more Chinese firms to the Entity List and setting stricter due diligence expectations. New “know your customer” guidance now requires U.S. exporters to carefully vet end users—especially where products may serve both civilian and military functions.
The effects of these policies are already felt across the industry. Synopsys, a leading chip design software firm, reported a 29% drop in China revenue for the quarter ending April 30, 2025. Citing the uncertainty created by the new restrictions, the company has suspended its financial forecasts. Nvidia has also experienced significant revenue losses due to the ban on exporting AI chips to China.
The business impact is already visible among key players in the industry. Synopsys, a leading chip design software firm, reported a 29% drop in China revenue for the quarter ending April 30, 2025, and has suspended its financial forecasts. Nvidia has also reported major revenue losses due to the ban on AI chip exports to China.
In response, Huawei, and by extension China, is accelerating efforts to build a fully domestic semiconductor supply chain:
- Investing in Chinese startups like Zhuhai Cornerstone Technologies to develop semiconductor-grade chemicals.
- Recruiting top international talent—including Harvard students and experienced engineers from global equipment makers.
- Constructing a large R&D center in Shanghai to develop its own chipmaking tools and lithography equipment.
As export rules continue to evolve, the divide between the U.S. and Chinese tech sectors is becoming more pronounced, reshaping global supply chains in the process.
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