'Burdensome' Export Regs Hindering Chip Manufacturing, Workforce, Companies Say
Some U.S. export control policies are hindering the American semiconductor sector and chip innovation, technology companies and trade groups told the Commerce Department in recent comments (see 2201210024). Commerce can take steps to ease compliance challenges, including around deemed export controls, and make sure to propose narrow and multilateral emerging and foundational technology controls, the commenters said.
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American semiconductor manufacturers are sometimes “deterred” from taking on a project because of the “burdensome and costly nature of complying with existing export control regulations,” the National Association of Manufacturers said in March comments. U.S. manufacturers would like Commerce and the State Department to “streamline export control policies, especially as they relate to deemed exports,” which can restrict technology transfers to certain foreign employees even if they are on U.S. soil, NAM said. This would better help companies operating in the U.S. manufacturing and defense industrial base “obtain semiconductor components from foundries located in the United States,” the association said.
“The federal government can help catalyze this transition by advancing policy recommendations [outlined] above while also pursuing a policy environment -- in trade, tax, regulatory policy, intellectual property protections and immigration reforms -- that supports manufacturers’ ability to quickly innovate and build,” NAM said.
Qualcomm also said Commerce should revisit its deemed export control regulations, which would help bolster the U.S. semiconductor workforce. The chip company said three additional American jobs are created for “every highly-educated immigrant who stays and works” in the U.S. “Deemed export requirements and immigration laws should ensure that foreign nationals can work in the United States while protecting national security interests,” Qualcomm said.
Commerce also should pursue narrow controls as it proposes new emerging technology restrictions under the Export Control Reform Act, Qualcomm said. Broad controls risk “disrupting semiconductor supply, especially in legacy node chipsets,” the company said, urging Commerce to “narrowly identify specific technologies critical to national security” along with key trading partners.
“Unilateral controls would only hinder Qualcomm and other U.S. companies from selling in foreign markets, undermining their [research and development] investments and disadvantaging them against their foreign competitors, some of whom have both the technology capability and funding to develop global leadership in these areas,” Qualcomm said.
The company also said the U.S. should “exempt standardization activities from the Export Administration Act.” Other companies and trade groups have urged Commerce to expand an exemption to allow U.S. companies to participate in standards-setting bodies that have members designated on the Entity List (see 2006160035 and 2202100039).
U.S. export regulations are also hampering defense companies operating in the semiconductor space, Raytheon said. Controls can restrict the use of “offshore suppliers for defense-specific products,” the company said, adding that a larger domestic manufacturing capacity could help solve the problem. Out of about 400 companies in the semiconductor supply chain, about 25% said export controls are the “greatest barrier” to domestic manufacturing, according to a survey conducted by technology groups Semiconductor Alliance and Mitre Enginuity.
“Establishing a commercially meaningful degree of capability in the U.S. sufficient to satisfy critical national defense needs in the event of a disruption to international markets and/or to meet export regulations would be a significant risk mitigation strategy and contribute to a stronger U.S. manufacturing base, economy, and national defense,” Raytheon said.
Raytheon also said it supports the Chips for America Act and its incentives for the semiconductor industry, but it stressed that companies should benefit from certain incentives only if they “develop and implement a plan to meet [Defense Department] and Intelligence Community needs for export-controlled work,” including with the International Traffic in Arms Regulations and Export Administration Regulations. The company also said chip facilities and processes that are most critical are ones with an “ITAR/EAR capable design and fabrication process and availability of export license exceptions/exemptions and/or expedited licensing in support of domestic manufacturing.”
Raytheon said the greatest “occupational” challenges facing the semiconductor sector include export control issues. The U.S. could help “mitigate semiconductor workforce labor shortage risk” through more “favorable” licensing policies, including a “narrow” license exemption under the ITAR or EAR to “facilitate the involvement of foreign nationals that work in the U.S.”
A Commerce spokesperson didn’t comment.