The United States is preparing to implement stricter regulations aimed at preventing advanced semiconductors from reaching China, following revelations that chips manufactured by Taiwan Semiconductor Manufacturing Company (TSMC) ended up in Huawei Technologies' devices despite existing restrictions. The Biden administration plans to unveil these rules in the coming days, marking another escalation in the ongoing U.S.-China technology rivalry.

According to sources cited by Bloomberg, the proposed measures would require semiconductor manufacturers, including TSMC, Samsung Electronics, and Intel, to enhance due diligence on their customers and chip designs. The regulations would target advanced chips, particularly those below a threshold of 14 to 16 nanometers, which are crucial for artificial intelligence and other high-tech applications.

The move is part of a broader effort to block "backdoor" channels that have allowed Chinese companies such as Huawei to obtain restricted technology. A draft of the new rules indicates that chips exceeding certain performance benchmarks-determined by transistor density-would need explicit U.S. government approval for export to China.

The Biden administration's actions follow the recent discovery of TSMC-manufactured chips in Huawei products, which prompted the U.S. Commerce Department to instruct TSMC to halt production of semiconductors at or below the 7-nanometer threshold for Chinese clients. TSMC has since severed ties with several entities suspected of facilitating unauthorized chip transfers, including China's Sophgo and Singapore-based PowerAIR.

The new rules would extend beyond existing restrictions by scrutinizing chip exports more comprehensively. Companies with chips containing fewer than 30 billion transistors or those packaged by trusted firms on a U.S.-approved list could qualify for exemptions. However, the regulations aim to ensure that high-performance processors used in AI accelerators and advanced computing systems are not accessible to Chinese firms.

The potential regulations are expected to impact leading semiconductor manufacturers significantly. Samsung and Intel have already been instructed to tighten their customer vetting processes. In response, these companies are enhancing compliance measures to avoid regulatory breaches and maintain their access to U.S. markets.

The Biden administration's efforts build on earlier semiconductor export curbs introduced to restrict Chinese access to AI technologies. On Monday, the White House issued an interim final rule on "Artificial Intelligence Diffusion," which clarified licensing requirements for chip sales to allied nations while further restricting exports to adversaries.

As the Biden administration's tenure nears its end, the timing of these measures is critical. President-elect Donald Trump is set to take office soon, and China reportedly views his return as an opportunity to renegotiate trade terms or exploit potential policy shifts. However, the Trump administration has yet to signal a softer stance on technology exports to China.

The semiconductor restrictions are part of a broader strategy to bolster U.S. technological leadership while curbing China's ability to develop advanced computing systems. Industry analysts suggest that the measures could have far-reaching implications for global supply chains and the competitive dynamics of the semiconductor market.