Reuters exclusively reported in March that Hua Hong Group had developed advanced chip manufacturing technologies that could be used to produce artificial intelligence chips, a milestone in Beijing's efforts to boost tech self-sufficiency. The group's contract chipmaking business, Huali Microelectronics, was preparing a 7-nanometer chipmaking process at its Shanghai plant, sources said.

U.S. chip equipment companies and other suppliers could lose billions of dollars in sales, one of the people said, especially if they were supplying a ⁠chipmaking plant that is under construction, or one that is retooling to begin making more advanced chips. The restrictions could slow China's domestic chipmaking drive, though Hua Hong may be able to replace the tools with ⁠ones from foreign or Chinese companies.