The United States has introduced new export controls to limit China’s ability to develop advanced semiconductor technology and slow its progress in military applications and artificial intelligence (AI). These measures, described as the most stringent to date, target both U.S. companies and foreign firms utilizing American technology in chip-making equipment.

The controls include a ban on exporting high-bandwidth memory (HBM) chips to China, a crucial component in AI systems. According to U.S. Commerce Secretary Gina Raimondo, the restrictions are “groundbreaking and comprehensive.” She emphasized their importance, saying, “These are the strongest controls ever imposed by the United States to reduce the People’s Republic of China’s ability to produce the most advanced chips used in its military modernization.”

In addition, the U.S. Department of Commerce will place 140 Chinese entities on its Entity List, often referred to as a “blacklist.” Companies on this list must obtain export licenses, which are expected to be nearly impossible to secure. Notable targets include, Semiconductor Manufacturing International Corporation (SMIC), Huawei Technologies, and Chinese firms involved in chip production equipment manufacturing.

According to the Financial Times, the regulations will affect 24 types of chip-making tools previously untouched. To enforce these rules more effectively, the U.S. will apply the Foreign Direct Product Rule (FDPR), impacting non-U.S. companies using American components or technology.

Notably, some U.S. allies, such as Japan and the Netherlands, have been granted FDPR exemptions after agreeing to adopt their own export controls. South Korea is awaiting a similar waiver. An unnamed U.S. official explained that the FDPR aims to prevent companies from circumventing controls by manufacturing tools in locations like Singapore or Malaysia for export to China.

The strategy reflects internal debates within the Biden administration regarding the extent of controls, particularly on Huawei’s operations. Some facilities of the Shenzhen-based company are not yet operational, raising questions about their capability for producing advanced chips. Officials appear divided, balancing tighter restrictions with the need for cooperation from allies.

Interestingly, some experts, including Gregory Allen, an AI specialist at the Center for Strategic and International Studies (CSIS), have noted that leading U.S. toolmakers, such as Applied Materials, KLA, and Lam Research, are doubling their production capacity outside the U.S.

Despite the robust measures, questions remain regarding why certain Chinese manufacturers, such as CXMT, a producer of HBM, have not been added to the Entity List. Officials believe other restrictions will limit CXMT’s production capabilities, though some have argued for more direct action.

Scott Bessent, a veteran hedge fund manager who worked for George Soros for many years, has been appointed Treasury Secretary, a decision that President-elect Donald Trump described as difficult but necessary.

When the appointment was announced, Wall Street and the financial markets “breathed a sigh of relief”, according to The Financial Times.

Bessent told The Wall Street Journal (WSJ) that his primary focus as Treasury Secretary would be fulfilling the president-elect’s promises to cut taxes and implement tariffs. He also emphasized plans to enact spending cuts and maintain the U.S. dollar’s status as the world’s reserve currency.

Currently the head of the macro hedge fund Key Square Group LP, Bessent is expected to play a pivotal role in advancing Trump’s agenda, which includes renewing some of Trump’s 2017 tax cuts, set to expire next year and easing financial regulations.

Bessent’s appointment has already influenced the global financial landscape, with currencies rising against the dollar amid diminishing fears of market instability.

Bloomberg highlighted the sense of relief among market participants, crediting Bessent’s Wall Street expertise. Bessent advocated for a gradual approach to implementing trade restrictions and expressed a willingness to negotiate tariff levels, calming concerns of abrupt policy changes.

Stephen Spratt, a strategist at Société Générale in Hong Kong, noted in a client memo that Bessent’s selection could trigger a relief rally in U.S. Treasuries as the risk of a more unconventional candidate was mitigated. Spratt added that Bessent’s moderate stance on tariffs could support Asian currencies.

Trump described Bessent as “one of the smartest guys on Wall Street” and praised his ability to navigate complex financial landscapes.

Bessent’s credentials are impressive. Twice employed by George Soros during the 1990s and 2010s, Bessent generated billions for the billionaire investor. Over the years, he cultivated relationships with some of the world’s wealthiest investors and most influential politicians, including members of Saudi Arabia’s elite families and Japan’s former Prime Minister, Shinzo Abe.

According to Forbes, former colleagues have consistently praised Bessent’s investment acumen. One former associate at Soros Fund Management remarked, “He comes across as a bit reserved and quiet, but he’s tough. He doesn’t suffer fools.” Another noted his ability to make decisive changes, saying, “He can walk away from something if the facts change.”

Bessent’s connection to Trump extends beyond their professional relationship. He has been a long-time friend of Blaine Trump, the wife of Robert Trump, Donald Trump’s late younger brother. Bessent donated $1 million to Trump’s inaugural committee in 2016 and has remained a staunch supporter, attending rallies and advising on economic policy during the 2024 campaign.

This election cycle, Bessent contributed $3 million to support Trump and other Republican candidates. On the eve of the election, he attended Trump’s final rallies in Pittsburgh and Grand Rapids. Speaking to Forbes from the Yale Club, Bessent said, “[Trump] is very sophisticated on economic policy. He has a lot of things he wants to talk about.”

Microsoft President Brad Smith has called on Donald Trump to take decisive action against cyber-attacks originating from Russia, China, and Iran, citing an alarming rise in state-sponsored hacking targeting U.S. government officials and election campaigns.

Speaking to The Financial Times (FT), Smith, who also serves as the company’s executive vice president and chief legal officer, emphasized that cybersecurity “deserves to be a more prominent issue in international relations.” He urged the incoming Trump administration to send a strong message to deter hostile nations.

“I hope the Trump administration will push harder against nation-state cyberattacks, particularly from Russia, China, and Iran. We cannot tolerate the level of attacks we have seen today,” Smith stated.

Rise in ransomware attacks

Smith pointed to a surge in ransomware attacks on U.S. companies, frequently carried out by criminal organizations that he said are often “tolerated … and in some cases, even facilitated” by the Russian government.

Adding to the concerns, U.S. law enforcement officials last week accused China of conducting a widespread cyber espionage campaign, infiltrating multiple American telecommunications networks ahead of the election.

According to Microsoft, its customers face more than 600 million cyber-attacks daily, underscoring the urgent need for robust defensive measures.

Progress under Biden administration

Smith acknowledged that the Joe Biden administration has made “tremendous progress in strengthening cybersecurity defenses.” However, he stressed the need for additional measures to deter and dissuade other nations from engaging in such activities.

A recent Microsoft study revealed that nation-state groups and criminal gangs are increasingly collaborating, sharing tools, and conducting joint operations to target vulnerable systems.

In his testimony before the U.S. Senate in September, Smith highlighted that Russia, China, and Iran have ramped up digital efforts to interfere in global elections, including those in the United States.

Microsoft faces security criticism

Despite its advocacy for stronger cybersecurity measures, Microsoft itself has faced scrutiny over its own security practices.

In March, a report by the U.S. Cybersecurity Review Board criticized the company’s security culture, describing it as “inadequate.” The report highlighted several “avoidable mistakes” that allowed Chinese hackers to access hundreds of email accounts hosted on Microsoft’s cloud systems, including those of senior U.S. government security officials.

In response, Microsoft CEO Satya Nadella pledged to prioritize security “above all else,” including linking employee compensation to improved security outcomes. The company has also begun implementing changes to its Windows operating system to enable faster recovery from incidents such as the global IT outage caused by a flawed CrowdStrike security update in July.

Call for exporting digital technologies to the Middle East and Africa

Beyond cybersecurity, Smith commented on the potential impact of a second Trump administration on the technology sector. He noted that anticipated changes to merger and acquisition regulations in the U.S. could be offset by heightened scrutiny in other regions.

Smith also renewed his call for the U.S. government to “help accelerate the export of key American digital technologies” to regions like the Middle East and Africa. This appeal comes in the wake of export controls imposed by the Biden administration on artificial intelligence chips over fears they could be diverted to China.

“We really need to standardize processes so that American technology can get to these other parts of the world as quickly as Chinese technology,” Smith stated.