The U.S. has spent months blocking exports of vital tools for advanced chipmaking to China. The idea: to choke off China's chip-making capabilities.

The goal of a new measure is to cut Chinese access to tools, software and support mechanisms needed to build specific transistors, two people familiar with the administration’s plans told Protocol’s Max Cherney.

• The administration plans to block U.S. exports of tools that print chips that involve a specific transistor type known as FinFET. It will also restrict companies that make these tools — including Applied Materials, Lam Research and KLA — from servicing equipment they’ve already sold to Chinese chipmakers.
• The technology is one of the fundamental building blocks of modern microchips, and is widely used to manufacture chips for servers, iPhones and more.

This is part of a bigger initiative: The U.S. Commerce Department already placed an export control rule on advanced chip design software needed to produce next-generation processors.

• The U.S. sees China’s chipmaking as a threat, Max told me, and Trump-era policies weren’t doing enough.
• Instead of just halting further progress in China, the administration is trying to “roll back its current capability,” Max said.

China isn't impressed by current U.S. semiconductor policy. Yu Xiekang, vice chair of the China Semiconductor Industry Association, has called the $52-billion U.S. Chips Act "discriminatory," Bloomberg reported.

U.S. tool companies will feel the impact of the new restrictions. China makes up around 30% of their revenue, a chunk of which is from service and support, as the tools used to build these chips becomes more complex.

• At least two companies — KLA and Lam Research — have already received notifications from the government about tool export restrictions.
• Shipments of machines will need to be redirected, but finding demand for the supply won’t be too difficult in the current climate. “Ironically, we don’t have enough chips to make the machines to make the chips we don’t have enough of,” Max said.

— Nat Rubio-Licht