The US Semiconductor Industry Association (SIA) called for the government to allow exceptions in a ban on investments in sensitive high-tech segments in China, insisting support for existing subsidiaries must be allowed.

In a statement, the SIA explained an exception is required to ensure business continuity and avoid supply chain disruptions, and should apply to capex for equipment, tooling upgrades for existing facilities and the purchase of raw materials.

The SIA stated it supports policies which safeguard national security without “unduly harming” commercial innovation, manufacturing and employment.

It was responding to a call for comments by the Department of the Treasury on an executive order directing the agency to issue regulations identifying categories of transactions involving technologies and products in countries of concern which may pose a threat to national security.

The SIA also suggested the Department of the Treasury harmonise outbound investment restrictions with existing rules impacting the semiconductor industry, including export controls introduced in October 2022 and guardrail provisions in the CHIPS and Science Act.

While some allied countries have their own outbound screening mechanisms, the SIA noted most major chip producing regions have not implemented similar regimes. “We are concerned this will result in an uneven playing field for US companies and erode our global competitiveness.”

The executive order prohibits private equity, venture capital and joint venture companies from investing in China-based entities involved in developing advanced semiconductors, quantum information technologies and AI systems.

South Korea’s government pushed the US to reconsider the export controls to allow its chipmakers to move ahead with existing plans to expand operations in China.

The US recently granted Samsung and SK Hynix indefinite waivers on the restrictions blocking them from importing chip equipment into China.