What is the FDPR and why is the US using it to cripple China’s tech sector?

Explanation: what is it

They did it for Huawei. They used it in Russia. right Now , United State It is pursuing advanced computing and supercomputer industry in China.

weapon? A little-known rule enables US regulators to extend control powers over the export of technology well beyond America’s borders to include transactions between foreign countries and China.

The provision is called the Foreign Direct Product Rule, or FDPRIt was first introduced in 1959 to control the trade in US technologies. It basically says that if a product is made using American technology, the US government has the power to prevent its sale – including products made in a foreign country.

On Friday, US officials applied the rule to China’s advanced computing and supercomputer industry to prevent it from obtaining advanced computing chips.

The rule took center stage in August 2020, when it was used against the Chinese telecom company Huawei Technologies Co., Ltd . US officials tried to cut off Huawei’s supply of semiconductors, but found that companies were still shipping in to Huawei chips made in factories outside the US.

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In the end, US regulators found a choke point: Almost all chip factories have critical tools from US suppliers. So they expanded the FDPR to control the trade in chips made with American technology or tools. The move was a blow to Huawei’s smartphone business, and US regulators in Russia and Belarus used it after the Ukraine invasion to cut chips.

Dan Fisher Owens, a specialist in chip export controls at law firm Berliner Corcoran & Rowe, said the expansion of the FDPR closed a gap in US export control authority.

However, he said the US was cautious about using the rule because it could draw foreign companies into the operation and “create friction” with allies who might not agree with US law enforcement.

Senior US officials said on Friday that the new application would stop advanced chips from being used in China’s supercomputers, which could be used to develop nuclear weapons and other military applications.

The United States has already put a number of Chinese computing giants on its restricted entity list, barring them from buying American chips. But those companies have begun designing and seeking to manufacture their own chips — a strategy that US actions on Friday were designed to thwart.

The latest move, he said, would prevent any semiconductor maker that uses US tools — which most do — from selling advanced chips to China. Karl Freundthe chip consultant at Cambrian AI that monitors the supercomputing space.

said Freund, a chip consultant at Cambrian AI who watches the supercomputing space.

In this case, he added, China may take five to ten years to catch up with current technology. (Reporting via Jin to finish me in Oakland, California; editing by Peter Henderson And the Richard Chang)