The U.S. Department of Treasury has finalized a rule restricting U.S. investments and exports in high-tech sectors in China, a move that could significantly impact major U.S. companies, including Nvidia (NVDA, Financials).
The rule stems from Executive Order 14105, signed by President Joe Biden in August 2023, which prohibits U.S. companies and individuals from engaging in “transactions involving a defined set of technologies and products that may contribute to a threat to the national security of the United States.”
This action is meant to restrict China’s access to cutting-edge technology meant to support its military, intelligence, and cybersecurity capacity.
“This Final Rule takes targeted and concrete measures to ensure that U.S. investment is not exploited to advance the development of key technologies by those who may use them to threaten our national security,” said Paul Rosen, Assistant Secretary for Investment Security at the U.S. Treasury Department.
Rosen said that “U.S. investments, including the intangible benefits like managerial assistance and access to investment and talent networks that often accompany such capital flows, must not be used to help countries of concern develop their military, intelligence, and cyber capabilities.”
Following a slew of limitations on both sides meant to limit access to vital technology, the new regulation marks the latest evolution in the continuous U.S.-China tech dispute. Nowadays, American IT companies are obliged to review their Chinese market presence and modify their plans in front of these fresh constraints.
This article first appeared on GuruFocus.
