The U.S. semiconductor sector faces new China sales restrictions

On Friday, companies throughout the world began to deal with U.S. limitations on chip and chip manufacturing equipment exports to China.

The Philadelphia Semiconductor Index (.SOX) dropped nearly 6% by the end of the trading day. Lam Research, Applied Materials, and KLA all experienced declines of over 4%.

Applied Materials is examining the new regulations, while Lam and KLA have not yet responded.

SK Hynix Inc. announced on Friday that it will apply for a license under the new U.S. export control legislation in order to continue operating in China.

On Friday, American officials imposed a comprehensive set of restrictions on the export of certain semiconductor manufacturing equipment to China. However, licenses can be obtained by U.S. and allied corporations.

SK Hynix will work closely with the Korean government to obtain a license from the U.S. government. We are prepared to operate our China fabrication operations efficiently and according to international standards.

Friday, Chinese authorities prohibited the sale of numerous "supercomputer" chips. Supercomputers create nuclear weapons and other forms of military technology. Last month, Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) announced they had been instructed to stop shipments to China.

Systems having 100 or more petaflops of double precision computing power or 200 or more petaflops of single precision processing power within 41,600 cubic feet are considered supercomputers. Petaflops are a unit of computing speed.

Nvidia, which stated last month that the regulations may affect sales in China by $400 million, expects no further impact, the company said on Friday.

"These laws place industry-wide restrictions on processors who meet certain criteria. We do not anticipate that the new regulations, which include sales restrictions for dense systems, will harm our business "company statement.

AMD didn't comment.