The Commerce Department is planning to expand export controls over certain semiconductor items destined to China (see 2208010011) next month, including those used for artificial intelligence and chipmaking tools, Reuters reported Sept. 11. Commerce already outlined some new restrictions in letters earlier this year to KLA, Lam Research and Applied Materials, Reuters said, which include new export licensing requirements on chipmaking equipment to Chinese factories capable of making chips more advanced than 14 nanometers. The new rules would also codify restrictions outlined by Commerce in letters to NVIDIA and AMD last month (see 2209010059), the report said.
Exports to China
New multilateral export controls on certain electronic computer-aided design (ECAD) software won’t have an immediate effect on semiconductor companies and are unlikely to cause wide concern in the short term, industry officials said. The controls, announced by the Bureau of Industry and Security Aug. 15 (see 2208120038) and effective in October, seek to restrict an emerging technology that may not be commercially available for at least two years, although officials say it remains unclear what exactly the restrictions will cover.
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The Bureau of Industry and Security added seven Chinese entities to its Entity List for acquiring or attempting to acquire U.S. technology to support China’s “military modernization efforts.” All the entities -- which include six research institutes connected to China Electronics Technology Group, one of the country’s largest electronics companies -- will require a license for all items subject to the Export Administration Regulations. BIS will review license applications under a policy of presumption of denial. The additions took effect Aug. 24.
China’s announcement this summer that it made progress in its chip technology doesn't necessarily mean there was a failure in U.S. export control policy, said Bill Reinsch, a senior export administration official during the Bill Clinton administration. Reinsch said it’s unclear if China’s new chip even exists and where Beijing received the equipment to produce it.
Congress should revise export control laws to ensure “naive bureaucrats” don’t prioritize commercial sales over national security, Sen. Marco Rubio, R-Fla., said this week. Rubio, referencing a Wall Street Journal report that said the U.S. approved 94% of license applications for technology exports to China in 2020, said the numbers show that “President Biden refuses to take the threat posed by the Chinese Communist Party seriously" and that “the situation is growing worse."
The U.S.’s recently announced export controls on four technologies that can be used to produce advanced semiconductors and gas turbine engines (see 2208120038) are a “violation” of international trade rules, a spokesperson for China’s Ministry of Commerce said this week. The controls -- which will impose license restrictions on two substrates of ultra-wide bandgap semiconductors, certain Electronic Computer Aided Design software and certain pressure gain combustion technology -- “will inevitably hinder international scientific and technological exchanges” and “threaten the security and stability of global industrial and supply chains,” the spokesperson said, according to an unofficial translation of an Aug. 18 news conference transcript. “The United States continues to generalize the concept of national security and abuses export control measures,” the spokesperson said.
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The EU needs to better diversify its trading partners and reform its anti-coercion instrument to protect itself from Chinese sanctions, Hinrich Foundation researchers said in a report this week. The EU also should establish a new multilateral economic security office to study and better respond to sanctions and trade restrictions imposed by third countries, the report said.
Even though U.S. export controls haven’t cut into SMIC’s profit margins, they have hurt the Chinese semiconductor company’s ability to advance its chip-producing technology, said Min-Hua Chiang, a Heritage Foundation research fellow. Because restrictions imposed by the Bureau of Industry and Security limit SMIC’s ability to import equipment for making chips below 10 nanometers, the company is “stuck with using older technology,” she wrote in an August post. “Without access to foreign equipment,” the post said, “it will be very difficult for China to produce the most advanced chips any time soon, putting a severe crimp in Beijing’s plans for its military and security apparatus.”