The Bureau of Industry and Security recently sent a proposed charging letter to Seagate Technology alleging that it violated U.S. export controls by providing controlled items to a company on the Entity List. Seagate said the Aug. 29 letter accused it of violating the Export Administration Regulations by providing hard disk drives to the blacklisted company and its affiliates between August 2020 and September 2021.
Exports to China
Although the new U.S. export controls against China are likely to have minimal impacts on the U.S. semiconductor industry, a broader implementation of the controls could quickly raise costs on U.S. and allied suppliers and hurt the domestic chip industry, the Rhodium Group said in a report this month. The research firm said damages to semiconductor companies “could balloon quickly under a tightening of controls,” which it believes is “highly plausible.”
Taiwan Semiconductor Manufacturing Company has halted its work on advanced silicon for a Chinese technology startup to make sure it’s complying with new U.S. export controls (see 2210070049), Bloomberg reported Oct. 22. The Taiwanese chipmaker suspended production for Biren, one of China’s “most promising semiconductor designers,” until it can determine whether Biren’s products are covered by the U.S.’s new advanced chip restrictions, the report said. It said TSMC halted production after coming across public information that Biren’s products outperform Nvidia’s A100 chips, which are captured under the U.S. controls. TSMC didn’t comment.
China’s Ministry of Industry and Information Technology held emergency meetings this week with the country’s leading semiconductor firms to assess the impact of new U.S. chip restrictions, Bloomberg reported Oct. 19. Chinese officials stressed to executives from Yangtze Memory Technologies Co., supercomputer company Dawning Information Industry and others that the domestic market would provide enough demand to make up for any lost sales caused by the U.S. export restrictions, the report said. But the government officials also “appeared uncertain about the way forward and at times appeared to have as many questions as answers for the chipmakers.” During the meeting, YMTC warned the government that “its future may be in jeopardy,” the report said.
Although President Joe Biden criticized the Trump administration tariffs on Chinese imports during his campaign, and although his treasury secretary repeatedly said they contribute to inflation and some of them are harmful, trade lobbyists for UPS and the U.S. Chamber of Commerce said the tariffs are largely here to stay.
Many companies are still trying to assess the “exact implications” of the U.S.’s new export controls on China (see 2210070049) and are hoping guidance from the Bureau of Industry and Security provides some answers, said Paul Trulio, an expert at the Center for Strategic and International Studies. Trulio told Bank of America that the controls are “still in the early stage” and it's too soon to “quantify the impact,” according to an Oct. 19 readout of a call published by the bank.
The Biden administration should cripple Huawei’s plans to build a semiconductor foundry in Shenzhen through additional export controls, five Republican senators said in a recent letter to the White House. They said Huawei is using Pengxinwei (PXW) IC Manufacturing -- a startup launched by a former Huawei executive, Bloomberg reported -- to build a new chip foundry in a bid to evade U.S. trade restrictions. The letter was signed by Marsha Blackburn and Bill Hagerty, both of Tennessee, Tom Cotton of Arkansas, Ted Cruz of Texas and Marco Rubio of Florida.
Apple has suspended plans to use memory chips from China’s Yangtze Memory Technologies Co. in its products, Nikkei Asia reported Oct. 17. The report comes days after YMTC was added to the Commerce Department’s Unverified List (see 2210070006) and after the agency announced a sweeping set of China-related export controls (see 2210070049). If Commerce can’t complete an end check of YMTC within 60 days after its addition to the UVL, the Chinese company may be moved to the more restrictive Entity List.
New advanced computing and chip export controls against China (see 2210070049) represent an “unprecedented degree” of U.S. intervention to preserve technology leadership and could deal a major blow to China’s semiconductor industry, the Center for Strategic and International Studies said in a report last week. But there are several “lingering gaps” in the new policy that the Bureau of Industry and Security should “swiftly” address if it hopes to make the rules as effective as possible, the report said, including adding more companies to the Entity List, making sure the restrictions are adopted by allies and ensuring the agency is properly staffed.
The State Department announced penalties on one person and three entities and their subsidiaries for illegal transfers under the Iran, North Korea and Syria Nonproliferation Act. The agency in a notice said the parties transferred items subject to multilateral control lists that contribute to weapons proliferation or missile production. The State Department barred them from making certain purchases of items controlled on the U.S. Munitions List and by the Arms Export Control Act and will suspend any current export licenses used by the entities. The agency also will bar them from receiving new export licenses for any goods subject to the Export Administration Regulations. The restrictions will remain in place for two years from the Oct. 3 effective date.