Signal US Foreign Direct Product Rule widens to AI models and HBM, constraining Korean fabs in China

Summary

Through the Foreign Direct Product Rule, Washington applies its Export Administration Regulations to items that are direct products of US technology or software, or that are made with equipment using them, under certain conditions. The rule already governs exports to China of chipmaking equipment, supercomputers and high-performance computing, and its reach is widening to AI models and high-bandwidth memory. The report identifies it as an important mechanism limiting equipment upgrades at Korean chipmakers' plants in China. In response to China's rare earth export restrictions, Washington is also considering curbs on exports to China of products that use, or are made with, US software. Because Korean industry depends on US technology while operating production sites in China, it is exposed to both the rule and wider US export control risk.