On October 7, 2022, the US imposed sweeping export controls aimed at cutting China off from advanced chips and the tools to make them, including a Foreign Direct Product Rule that extended restrictions to products made with US technology. Three years on, the rules forced redesigns of chips and supply chains, prompted China to retaliate with bans on some US suppliers and reshaped global AI competition, say policy experts and industry figures. With presidents Donald Trump and Xi Jinping set to meet at the upcoming APEC summit, some analysts say a negotiated deal could alter the balance but deep structural rivalry remains. TaiwanPlus takes a look back at the US export controls in this special report.
00:00On October 7, 2022, the U.S. drops a bombshell on the tech world, sweeping new export controls,
00:07aiming to cut China off from advanced chips and the tools to make them. Coming just weeks before
00:13ChatGPT would set off the AI boom, the decision would strongly shape U.S.-China relations and
00:19global tech competition over the next three years. Last week, we launched significant,
00:24carefully tailored restrictions on semiconductor technology exports to the PRC. These technologies
00:31are used to develop and field advanced military systems, including weapons of mass destruction,
00:37hypersonic missiles, autonomous systems, and mass surveillance. While previous restrictions had
00:43targeted single companies like China's Huawei in 2019, this was a major escalation, covering the
00:49entire chip supply chain. What happened between 2019 and 2022 was AI, right? I mean, basically,
00:57AI came into the picture. And the idea was, wow, AI is getting really capable. And at some point,
01:03you might want to control who has access to it, in particular, malicious actors.
01:06There are different perspectives. And I served in the Biden administration around this time. And so I
01:11know that the federal government was very, the Biden administration, the federal government was very
01:18focused on targeting and not kind of the whole supply chain, essentially, of semiconductor and an
01:27underlying AI technologies. Beijing strongly objected from the start, calling it an attempt to contain China.
01:35Beijing
01:45A key enforcement tool, known as the foreign direct product rule, extended the ban not just to U.S.-made products, but to any product made with U.S. technology anywhere in the world. That had a huge impact, even on companies in Taiwan, like chip giant TSMC.
02:12Even in 2020, TSMC had had to stop collaboration with Huawei. And at that time, Huawei was something like 15 percent of TSMC's revenue. The China market, if you look at TSMC and where it was poised to go before the controls, was certainly impacted.
02:31The rules applied not only to chips, but also chip-making tools like lithography systems. That required buy-in from governments and companies in countries like the Netherlands and Japan, where these key tools are produced.
02:44To comply with the rules, some chip designers, like U.S.-based NVIDIA, began making new, slower chips, specifically for the China market. But in 2023, China began to hit back, banning products from U.S. memory maker Micron and computers deemed sensitive, citing serious network security risks, which the U.S. says were false.
03:04The recent announcement by the PRC regarding Micron, we believe, are not based in fact. And so the Department of Commerce is engaged directly with the PRC to detail our views on this.
03:16In October 2023, almost exactly one year after the controls began, the U.S. expanded restrictions to cover new China-only models from NVIDIA and other loopholes, while China banned exports to the U.S. of critical minerals used in military and 5G devices.
03:33In April 2025, President Trump, back in the White House, announced his Liberation Day tariffs on every foreign country.
03:42China was hit hardest of all, with some tariffs exceeding 100%.
03:46China retaliated by issuing its toughest restrictions yet, cutting off multiple rare-earth minerals to U.S. companies.
03:54I wanted to stress how important that is. The world is very different.
03:57Because China now has the ability very quickly to cut off, you know, and damage U.S. companies very quickly.
04:05So that gives them, you know, they don't want to overuse that, but it gives them a significant leverage.
04:10That's a moment where rubber meets the road and the U.S. decision maker realized, oh, they have a bargaining chip too.
04:17And it's equally powerful as ours.
04:21Just as the tech war seemed to reach a boiling point, both sides pulled back.
04:25By June, tariffs were lowered and rare-earth bans were lifted.
04:29But the friction continues.
04:31NVIDIA's attempt to sell its China-only H20 chip saw White House intervention, with Trump demanding a 15% cut of its sales.
04:40The U.S. recently extended export controls to the subsidiaries of sanctioned Chinese firms.
04:45After three years of export controls, have they worked as their creators intended?
04:49At one level, yes, there has, you could argue, there has been success in slowing down the ability of Chinese companies to train advanced AI models.
05:00However, at the same time, Chinese AI models are very capable.
05:05And Chinese companies now dominate the leaderboard for virtually all open source, open weight models.
05:12I think the near-term effect is very clear.
05:16They want to delay China's technology progress for a few generations, and they definitely achieved that.
05:22I think like eight years, 10 years from now, whether Chinese can create their own substitute for EUV and find a way to manufacture in a way that's comparable TSM to TSMC, I think that's the bigger question.
05:37Now, all eyes are on the upcoming APEC summit in South Korea, where the two presidents are scheduled to meet and negotiate a potential deal.
05:45We could wake up in March of 2026 with a significantly different world where there has been a deal over sort of trading rare earth access for export controls.
05:57This is one potential scenario.
05:59When are they going to close the TikTok deal, whether China will purchase those soybeans and airplanes, and whether U.S. government will take half a step back on their Taiwan position?
06:13I think those are things that need, that take a lot of time to negotiate those details.
06:19Regardless of any deal, the underlying competition may be here to stay.
06:24There aren't all that many areas of overlap in our last two U.S. administrations' thinking and approaches, but on export controls and on U.S.-China technology competition, especially in these really important technology areas, there has been continuity.
06:42Three years after export controls began, AI is more critical to our lives and the global economy than ever, and control over that technology remains the key to growth, diplomacy, and power.
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