A Bureau of Industry and Security official last week confirmed the agency sent letters to specific companies restricting their ability to export certain artificial intelligence-related chips to China, and said more restrictions may be coming. In the agency’s first public comments on the matter, Thea Kendler, BIS’s assistant secretary for export administration, said the agency hopes the letters help inform industry about the types of exports the agency is scrutinizing.
Exports to China
While the Biden administration hasn't yet decided whether to establish an outbound investment screening regime, officials believe more investment screening could help fill certain gaps in semiconductor-related export controls, said Peter Harrell, a National Security Council official. Harrell said an outbound regime also could provide the U.S. with more information about global semiconductor investments, which could be useful as the U.S. seeks to stop China from acquiring advanced chip equipment.
A new Commerce Department rule aimed at making it easier for certain U.S. technologies to be shared at standards-setting bodies will “undermine” U.S. efforts to protect those sensitive technologies from being acquired by China, Rep. Michael McCaul, R-Texas, said. Although the rule, issued last week (see 2209080038), sought to allow the participation of U.S. companies in international standards bodies that have members on the Entity List, McCaul said it also undermines U.S. export restrictions. “Companies that are entity-listed are threats to national security, and we need real safeguards to ensure sensitive technology is not transferred to these bad actors,” said McCaul, the top Republican on the House Foreign Affairs Committee.
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.
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.
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.
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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.
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.
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."