The U.S. is considering unilateral restrictions on China’s access to AI memory chips and equipment capable of making those semiconductors as soon as next month, a move that would further escalate the tech rivalry between the world’s biggest economies.

The measure is designed to keep Micron Technology Inc. and South Korea’s leading memory chipmakers SK Hynix Inc. and Samsung Electronics Co. from supplying Chinese firms with so-called high-bandwidth memory, or HBM, chips, according to people familiar with the matter, who emphasized that no final decision has been made. The three firms dominate the global HBM market.

If enacted, the new rule would capture HBM2 and more advanced chips including HBM3 and HBM3E, the most cutting-edge AI memory chips being produced right now, the people said, as well as the tools required to make them. HBM chips are required to run AI accelerators like those offered by Nvidia Corp. and Advanced Micro Devices Inc.

Visitors wearing masks look at the ARM-structure server processor Yitian 710, developed by Alibaba’s in-house semiconductor unit T-Head, at the Apsara Conference, an annual cloud service technology forum hosted by Alibaba Group, in Hangzhou in east China’s Zhejiang province in Oct. 2021.  Chinatopix via AP, file

Micron would largely be unaffected as the Boise, Idaho-based chipmaker has refrained from selling its HBM products to China after Beijing banned its memory chips from critical infrastructure in 2023, the people said. They spoke on condition of anonymity to discuss sensitive government information.

It’s unclear what authority the U.S. would use to restrict the South Korean firms, the people said. One possibility is the foreign direct product rule, or FDPR, which lets Washington impose controls on foreign-made products that use even the tiniest amount of American technology. Both SK Hynix and Samsung rely on U.S. chip design software and equipment from the likes of Cadence Design Systems Inc. and Applied Materials Inc.

Through a spokesperson, the Commerce Department said in a statement that it’s “continually assessing the evolving threat environment and updating our export controls, as necessary, to protect U.S. national security and safeguard our technological ecosystem. We remain committed to working closely with our allies who share our values.”

Micron declined to comment, while Samsung and SK Hynix didn’t immediately respond to requests for comment.

The new restrictions are likely to be unveiled as soon as late August as part of a broader package that also includes sanctions against more than 120 Chinese firms and fresh limits on various types of chip equipment, with carveouts for key allies including Japan, the Netherlands and South Korea, the people said. That means the equipment measures would primarily target U.S. companies.

President Biden’s administration has already asked Seoul to rein in exports of chip technology to China, with a focus on manufacturing equipment, and adopt controls similar to those the U.S. has already implemented, Bloomberg News has reported.

While the new measures would curb direct sales of HBM chips to Chinese companies, it’s unclear whether high-end memory chips bundled together with AI accelerators would be allowed for sale in the Asian nation. Samsung is now supplying HBM3 for Nvidia’s H20 chips, a less powerful AI accelerator that has been cleared for Chinese firms, Bloomberg News has reported.

As part of its comprehensive HBM-related curbs in the same export control package, the U.S. plans to lower the threshold for what qualifies as advanced dynamic random access memory, or DRAM. A single HBM chip contains several DRAM dies.

CRITICAL COMPONENTS

New restrictions on HBM equipment and DRAM aim to deter leading Chinese memory chipmaker ChangXin Memory Technologies Inc. from advancing its technology, according to some of the people. CXMT is now capable of making HBM2, which first became commercially available in 2016.

Biden administration officials also plan to create a list of the critical components that China needs to keep producing semiconductors. They’re also eyeing what’s called a zero de-minimis rule, an even tighter standard for FDPR under which any products containing U.S. technology would be subject to potential restrictions. A large group of U.S. allies will be exempted from that measure, including Japan and the Netherlands.

Huawei Technologies Co. is now offering its Ascend AI chips as an alternative to products from Nvidia and AMD just as Beijing seeks to bolster self-sufficiency in critical technologies in response to tighter U.S. restrictions. However, it is unclear who supplies Huawei with the HBMs that are bundled with its Ascend chips.

With assistance from Ian King and Yoolim Lee.