China’s Semiconductor Manufacturing International Corp. “potentially” violated U.S. export control laws by producing 7 nanometer computing chips with American equipment it obtained before the Bureau of Industry and Security imposed updated export controls on chip-making tools last year, BIS Undersecretary Alan Estevez said.
A trade association representing ASML, Applied Materials and other major semiconductor companies called on the EU to keep any new export controls narrowly targeted and abandon its plans for an outbound investment screening mechanism, saying new restrictions would be a “major interference” for the chip industry. It also cautioned European lawmakers about introducing new supply chain reporting obligations that would place too big a burden on industry.
Governments could eventually require companies to monitor their sensitive semiconductor equipment shipments by using location tracking features, which could help industry better conduct due diligence and improve government export enforcement, said Chris Miller, an expert on semiconductor technology policy and history.
Chinese semiconductor innovation could become “more difficult to assess” as Beijing grows more cautious about advertising its successes, which it fears could invite new U.S. export controls, said Paul Triolo, a China and technology policy expert.
American chip company Applied Materials has received multiple U.S. government subpoenas in recent months -- including one from the Bureau of Industry and Security -- asking for information about its exports to Chinese customers.
The U.S. may need new industry advisory committees to help it implement and maintain its semiconductor export controls against China, the Center for Strategic and International Studies said in a recent report.
Matthew Axelrod, the Bureau of Industry and Security's top export enforcement official, traveled to Germany last week to talk with European industry executives and enforcement officials about export controls and to speak at the 2024 Munich Security Conference. BIS said Axelrod “participated in several discussions regarding national security challenges facing the United States and its partners.” Matthew Olsen, head of DOJ’s National Security Division, and Paul Rosen, the Treasury Department’s assistant secretary for investment security, also attended.
The EU and the U.S. should try to reach a more “concrete” set of outcomes before the next Trade and Technology Council meeting in April and may discuss making the body permanent, said Valdis Dombrovskis, the EU’s top trade official. He said the two sides are “fleshing out new ideas” on supply chain, export controls and investment screening issues, and they want to make progress before the current European Commission term ends in October and before the upcoming U.S. presidential election.
The U.S. and other governments have so far placed export controls only on advanced semiconductors because they may believe restrictions on a broader, more mature set of chips won’t be effective, experts said this week.
Technology companies, trade groups, think tanks and researchers urged the government to be cautious as it evaluates its semiconductor-related export controls and prepares new ones, warning that misguided restrictions could cede American technology leadership to China, hurt the competitiveness of U.S. companies and raise the complexity of an already fraught compliance landscape.