Biden Administration To Expand Sanctions On Semiconductor Sales To Russia, Targeting Chinese Third-Party Sellers: Report

In a bid to counter Russia’s efforts to bypass Western sanctions, the U.S. government is set to broaden its sanctions on the sale of semiconductor chips and other goods to Russia. The new sanctions will also target third-party sellers in China.

What Happened: The Biden administration is planning to announce the expansion of existing export controls, including U.S.-branded goods, not just those produced in the United States, Reuters reported, citing sources familiar with the plans. The announcement is expected to be made on Wednesday.

The new sanctions are part of a broader strategy to counter Russia’s attempts to evade Western sanctions and support its war efforts against Ukraine. The U.S. will also identify specific Hong Kong entities that are involved in shipping goods to Moscow.

White House spokesperson John Kirby had earlier hinted at new sanctions and export controls against Russia. The announcement comes as President Joe Biden prepares to leave for a summit in southern Italy with other Group of Seven democracies.

The leaders’ primary focus will be on increasing support for Ukraine, which is currently in its third year of resisting Russia’s invasion.

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U.S. officials have expressed growing frustration over China’s increasing trade with Russia, which they argue is enabling Moscow to continue arming its military. They claim that exports from China and other countries of machine tools and other manufacturing equipment are aiding Russia in producing weapons it previously imported.

Why It Matters: The U.S. has been actively trying to curb international support for Russia’s war efforts. In April, U.S. Treasury Secretary Janet Yellen warned Chinese banks and exporters against aiding Russia’s military capacity, citing potential sanctions. This led to China’s major banks halting transactions related to Russia, forcing Chinese companies to seek alternative channels for payments, including cryptocurrency.

Meanwhile, the U.S. has also been considering sanctions on certain Chinese banks over their commercial support of Russia’s war in Ukraine. The U.S. is now broadening its sanctions to include U.S.-branded goods and third-party sellers in China, as part of its ongoing efforts to cut off international support for Russia’s war efforts.

China, on the other hand, has been making strides in its own semiconductor industry. Despite U.S. sanctions, Chinese scientists have achieved mass production of optical chips at a low cost. Additionally, China’s Semiconductor Manufacturing International Corp. has been ramping up its chip production with domestic tools, potentially counteracting U.S. export restrictions.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote