The US Department of Commerce released a new set of sweeping rules which aim to cut off China from manufacturing or importing key AI-powered chips and components used to build supercomputers.

The move is being seen as another step towards escalating tensions between Beijing and Washington in the tech industry. The move will likely make it more difficult for China to boost its own domestic industry. America’s logic behind the curbs are because it thinks China will use the semiconductors to advance its military technology. 

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Here are some of the new rules:

1) Going forward, companies will require licenses to export high-performance chips to China. These chips are usually used for artificial intelligence-based applications

2) Chips not made in the US but still use American tools and software to design and manufacture them will require licenses to export to China.

3) American companies will be restricted from exporting certain kinds of machinery to Chinese companies that are building chips of a specific quality. 

“The latest chip rules are a sign that Washington is not trying to rebuild relations with Beijing. Instead, the U.S. is making it clear that it’s taking this competition more seriously than it ever has, and is willing to take steps that were once unthinkable,” Abishur Prakash, co-founder of the Center for Innovating the Future told CNBC. 

The new rules mean that other countries that produce such advanced chips could face pressure to not sell certain pieces of equipment to China. It means that companies must obtain a license to ship machinery to Chinese companies that manufacture memory chips or logic semiconductors of 16 nanometer, 14 nanometer or below. 

Nanometer refers to the size of each individual transistor on a chip. Therefore, the lower the size of the transistor, the more that can be packed on to a single semiconductor. Which in turn means that a reduction in nanometer provides more powerful and efficient chips.