Researcher: US Seems ‘Hesitant’ to Control Chip Equipment to Avoid Hurting China Talks
The Trump administration appears to be avoiding new China-related controls on sensitive semiconductor manufacturing equipment because it fears those restrictions could impede a trade deal, a technology policy researcher said this week. Other researchers said the administration isn’t using its chip bargaining power correctly, adding that the U.S. should be getting more for the deals it has made so far with Gulf nations and potentially others in the future.
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Sam Winter-Levy, a fellow with the Technology and International Affairs Program at the Carnegie Endowment for International Peace, noted that the Trump administration hasn’t yet taken “any action” to tighten controls on chip tooling equipment and has taken limited action to restrict advanced chips. Although the Bureau of Industry and Security earlier this year informed Nvidia and other chip firms that they needed licenses for shipments of certain advanced chips to China, including the H20 (see 2504160026), the U.S. lifted those H20 restrictions in July as part of a trade arrangement with Beijing (see 2507150013).
Winter-Levy, speaking during an event this week hosted by the Center for a New American Security, said he believes that some in the administration “have been convinced” that keeping China “dependent” on H20 chips is better than restricting those exports. But he also said the administration is growing hesitant to take tough export control moves against China due to concerns that Beijing will retaliate -- including by restricting exports of rare earths (see 2506110044) -- and any new restrictions could hurt ongoing trade talks between the two countries.
“I think the U.S. wants to de-escalate this trade conflict,” he said. “They want a deal, and so they’re being a little more hesitant about applying new controls on semiconductor manufacturing equipment because of the fear that this will reignite a trade war in which the U.S.’s hand is perhaps not as strong as they thought it was.”
The White House, as part of its AI Action Plan released in July, called on the Commerce Department to develop new controls on the subsystems of semiconductor manufacturing equipment (see 2507230028). But Winter-Levy said he’s unsure how long it may take for the administration to commit to tougher tooling controls against China.
“Given the broader direction of travel towards potentially a U.S.-China trade deal, where export controls may be on the table, I'm not sure when we'll see more assertive action on trying to control these kinds of critical inputs to this technology that I think we all agree is going to be a core national security technology in the coming years,” Winter-Levy said. “So I think it's a difficult question that the administration has sort of backed itself into with its broader trade war.”
Winter-Levy and other panelists during the CNAS event also were critical of the U.S. approach to negotiating chip deals with other nations. Sam Hammond, chief economist at the Foundation for American Innovation, said he doesn’t think the administration “fully understands the bargaining position they have,” especially considering the demand for advanced Nvidia chips.
“Countries like the [United Arab Emirates] and China want anything to get these chips. They’ll wine and dine policymakers when they travel there,” Hammond said. “Recent events tend to make me think” the administration doesn’t “quite understand the deals that they're cutting and what level of concessions they're making.”
He said the H20 chip is a “world historic technology,” but the U.S., in negotiations with China, is treating it “as akin to soybeans or something like that.”
“I think there needs to be a little bit of a level-setting where it actually should work in the administration's favor,” Hammond said. “They're not extracting everything they could extract, based on what’s been reported.”
Along with easing curbs on H20 sales to China, the Trump administration announced AI deals with Middle East countries earlier this year, including the UAE (see 2507090032), which are expected to give those nations greater access to cutting-edge American semiconductors.
Janet Egan, a senior fellow with CNAS' Technology and National Security Program, said she and others visited the UAE and Saudi Arabia earlier this year, and they heard from American businesspeople in the region that the U.S. wasn’t obtaining enough concessions.
“That was a message we heard again and again, that the U.S. doesn't seem to realize the negotiating leverage it has and how much it can ask of other partners for the compute,” she said.