Concerns about the prospects for Beijing's technology ambitions caused shares in Chinese chipmakers to plummet.
Unless the sellers have an export license, the Biden administration will limit the sale of US-made chips. 31 Chinese companies were added to it.
The measures could make it hard for Chinese companies to get chips made in the US. In what's seen as the biggest change in US export policy toward Beijing in decades, that could hold back China's own efforts to develop advanced technology.
According to analysts, the US is trying to restrict Beijing's technological self-sufficiency and will likely cause Semiconductor stocks to fall even further.
According to a note, the US administration has increased its strict rules on exports, which include a measure to prevent China from using certain US equipment.
The Chinese tech sector is likely to be put a further brake on by this development.
The biggest chipmaker in China fell in Hong Kong. The company lost 20%.
Semiconductor stocks were lower before the market opened. At last check, Advanced Micro Devices was down 1.61% to $57.47.
The chief strategist at a hedge fund says investors should avoid chip makers and shares what they should buy.
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