WASHINGTON — The Trump administration escalated its tech war with Beijing, expanding export controls on advanced artificial intelligence semiconductors and chipmaking equipment bound for China. The Commerce Department issued a rule requiring licenses for any U.S. company selling chips exceeding a performance threshold of 4,800 tera operations per second (TOPS) to Chinese entities, significantly broadening previous restrictions on AI-related technology.
The regulation also targets components used in extreme ultraviolet (EUV) lithography machines, essential for producing cutting-edge chips. U.S. officials cited national security concerns as the primary driver, arguing the controls will impede China's ability to develop advanced AI capabilities for military use.
U.S. chipmakers face immediate revenue pressure. Nvidia's share price dropped 1.6 percent to $208.76, reflecting investor concern over reduced access to the Chinese market. Chinese tech giants Huawei and SenseTime, which rely heavily on imported advanced chips, will now have to seek alternative suppliers or develop less capable domestic solutions.
The decision follows months of intense lobbying from both sides. National security advocates, including the Committee on the Present Danger: China, pushed for stronger controls, arguing that U.S. technology fuels China's military modernization. The Semiconductor Industry Association, which represents Intel, Nvidia and other major chipmakers, lobbied against broad bans and spent $5.4 million on lobbying in the first half of 2026, warning of lost market share and reduced research and development funding.
Treasury Secretary Scott Bessent backed the Commerce Department's action, saying the administration prioritizes long-term strategic advantage over short-term commercial gains in critical technology sectors. The move marks a win for the national security faction within the White House and a setback for U.S. tech companies seeking access to China's market.
The new rule takes effect Sept. 1. Enforcement will require U.S. companies to conduct more stringent due diligence on end-users and the applications of their products, adding compliance costs and operational complexity for firms across the global semiconductor supply chain.
