If true, the development could have wide-ranging impact on the US semiconductor industry. The US government exercises tight control over the export of advanced high-tech manufacturing techniques, and that should restrict Intel from using anything under 0.18 micron in China. Even its NOR flash is made on more advanced processes.

The changes, championed by the Bush administration, may fall into place as early as April and are intended to cast a wider net over commercial technology products that might make a "material contribution" to the ad- vancement of China's military. The proposal, known as the "military catchall," is pitting hawks in the administration against U.S. tech interests that fear a crippling impact on their business with China.