Trump administration is reportedly weighing limits to China’s access to chip technology

A worker at the photolithography section of a semiconductor plant of the Mikron Group in Zelenograd, Moscow.

Anton Novoderezhkin | TASS | Getty Images

The Trump administration is weighing trade restrictions on China that would limit the use of American chip-making equipment, The Wall Street Journal reported Monday.

People familiar with the matter told the Journal that the Commerce Department is drafting changes to the foreign direct product rule that would require chip factories globally to obtain licenses if they want to use American equipment to create chips for Huawei.

The proposed rule comes as the Trump administration looks to cut off China’s access to the U.S. semiconductors, one of China’s largest imports from America. Many U.S. officials have argued that Huawei’s equipment could be used for espionage by the Chinese government, although the company denies those claims and says its equipment is secure. A separate rule would limit the ability of U.S. companies to supply Huawei from overseas facilities.

The proposed changes could also harm U.S. manufacturers of semiconductor equipment, like Applied Materials and Lam Research.

The changes have not been reviewed by President Donald Trump and not everyone supports the proposed rule, the newspaper reported.

The Commerce Department declined to comment on the proposed rule to CNBC.

Read more about the impact of the possible trade restrictions here.

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