A new U.S. rule expected this month could expand restrictions on foreign exports of certain chip equipment to China but exclude chipmakers in the Netherlands, Japan and South Korea, Reuters reported July 31.
Exports to China
Companies should expect the Treasury Department to aggressively penalize violators of its upcoming outbound investment prohibitions relatively soon after those rules are finalized, lawyers with Kirkland & Ellis said this week. They also said American chip companies and other technology firms are considering inserting new outbound investment-related warranties in their contracts and may start pulling out of existing investment deals that could soon be captured by the new prohibitions.
A new report accompanying the Senate Appropriations Committee’s FY 2025 Commerce-Justice-Science Appropriations Bill calls for the Bureau of Industry and Security to conduct several export control reviews, including one that identifies regulatory “gaps” that have allowed controlled U.S. technology, especially semiconductor technology, to flow to China without a license (see 2407260054).
U.S. intelligence agencies are warning American emerging technology startups about the risks of accepting certain foreign investments, saying “foreign threat actors” from China and elsewhere are using those investments as a guise to steal sensitive technology.
Minsu Fang, a Chinese national, was indicted for allegedly conspiring to import what the U.S. government believes to be "the largest amount of fentanyl precursors found in the Southern District of Texas and one of the largest in the country," DOJ announced July 22.
Stopping U.S. firms from participating in RISC-V, an open-source semiconductor architecture that policymakers fear China will use to evade export controls, would only hurt American innovation and competitiveness, the Information Technology and Innovation Foundation said this month.
The U.S. is trying to convince more of its allies to increase export controls on advanced semiconductors and chip making equipment destined to China, but some haven’t committed, in part because they’re worried about possible trade retaliation from Beijing, said Alan Estevez, undersecretary of the Bureau of Industry and Security.
Chinese and South Korean officials last week held their first meeting of a new export control dialogue forum in Beijing, where they “exchanged in-depth views on relevant export control issues,” China’s Ministry of Commerce said in a news release, according to an unofficial translation. The two sides also agreed to continue “close communication, create good conditions for the normal development of bilateral trade, and work together” to maintain the “smooth flow” of supply chains. The meeting was held about two weeks after the U.S. and South Korea discussed export controls as part of the second meeting of the U.S.-Korea Supply Chain and Commercial Dialogue Ministerial (see 2406280026).
The House Appropriations Committee has included several export control provisions in a new report accompanying its version of the FY 2025 Commerce-Justice-Science Appropriations Bill.
The Biden administration is having “a lot” of conversations with China to try to convince the country to stop shipping certain dual-use goods to Russia, and some of those conversations appear to be working, said Jay Shambaugh, the Treasury Department’s undersecretary for international affairs. But Shambaugh also said the U.S. wants Beijing to do more, and the administration is analyzing whether its current trade and financial restrictions are strong enough.