The crackdown, if approved, would involve barring the shipment of U.S. chipmaking equipment to factories in China that manufacture advanced NAND chips.

Under the action being considered, U.S. officials would ban the export of tools to China used to make NAND chips with more than 128 layers, according to two of the sources. LAM Research Corp and Applied Materials, both based in Silicon Valley, are the primary suppliers of such tools.

It would mark the first U.S. bid through export controls to target Chinese production of memory chips without specialized military applications, representing a more expansive view of American national security, according to export control experts.

The move also would seek to protect the only U.S. memory chip producers, Western Digital Corp and Micron Technology Inc, which together represent about a quarter of the NAND chips market.

Production of NAND chips in China has grown to more than 23% of the worldwide total this year from under 14% in 2019, while production in the United States has decreased from 2.3% to 1.6% over the same period, Yole data showed. For the American companies, nearly all of their chip production is done overseas.

All the sources described the administration's consideration of the matter as in the early stages, with no proposed regulations yet drafted.

Asked to comment on the possible move, a spokesperson for the Commerce Department, which oversees export controls, did not discuss potential restrictions but noted that "the Biden administration is focused on impairing (China's) efforts to manufacture advanced semiconductors to address significant national security risks to the United States."

Tensions between China and the United States over the tech sector deepened under Biden's predecessor Donald Trump and have continued since. Reuters reported on July 8 that Biden's administration is also considering restrictions on shipments to China of tools to make advanced logic chips, seeking to hamstring China's largest chipmaker, SMIC

The U.S. Congress last week approved legislation aimed at helping the United States compete with China by investing billions of dollars in domestic chip production.