US to widen sanctions to curb chip sales to Russia

President Joe Biden’s administration is widening sanctions on the sale of semiconductor chips and other goods to Russia, targeting third-party sellers in China and elsewhere, Report informs referring to Bloomberg.

The Biden Administration on June 12 will announce changes that broaden the scope of existing export controls and restrictions to target US-branded goods even if they’re not made domestically, according to people familiar with the move who requested anonymity to detail the plans before the announcement.

Chips, in particular, are a key target of the changes. Russia is still managing to source chips from third-party countries for use in missiles and other inputs critical to the battlefield, according to the people, despite a push to curb Moscow’s access to technologies supporting its war effort.

The US will widen the categories of restricted items by publishing broader product codes and also identify, by address, Hong Kong entities it alleges are funneling goods to Moscow, the people said.

One of the biggest changes in the expanded sanctions relates to how the US enforces requirements that require an export license for manufacturers or third-party sellers to sell chips and other goods to Russian military entities, according to the people familiar with the moves.

US regulators aim to curb sales of chips made abroad, and sold abroad, if they’re US-branded or if they’re made based on US technology or with US-linked equipment, and thus subject to sanctions. Previously, enforcement has focused more on US-origin goods. The US will identify third-party sellers and warn them that they are restricted from sending US-branded chips to Russia, one of the people said. The resellers are often based in China.

The US will also publish addresses — without a known company name — on its list of sanctioned entities for the first time, according to the people. That includes eight addresses in Hong Kong that the American government says are linked to reshipments of chips to Russia.

Resellers can apply for a license for sale if it’s for a legitimate, non-military purpose, the people said.

Companies violating sanctions could be subject to criminal penalties or restrictions on their own inputs, one of the people said.

The Biden Administration will also detail so-called temporary denial orders related to firms they accuse of flouting restrictions and selling goods, particularly related to Russia’s aviation sector, one of the people said. And the US is expanding restrictions on enterprise software used in Russia, which would have the practical effect of halting updates for that software.