The Biden administration’s October semiconductor chip controls against China (see 2210070049 and 2211010042) are expected in the short term to “constrain” the country’s access to the most advanced chips “used in computationally intensive subfields” of artificial intelligence, the International Institute for Strategic Studies said in an April report. But the controls could spur Chinese AI researchers toward “subfields that are less computationally demanding” and lead them to develop “new competitive advantages” in those areas, the report said.
The U.S., the Netherlands and Japan need to prepare for “expanded” Chinese retaliation as a result of their pact to impose new export controls on advanced semiconductor equipment (see 2303310031 and 2303090032), the Center for Strategic and International Studies said in a commentary this week, adding that China has “long put national security goals above those of market efficiency.”
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The Commerce Department’s proposed guardrails for recipients of Chips Act funding could lead to compliance risks for semiconductor companies, especially as the agency bolsters its enforcement arm, law firms said. They also said companies should carefully review how the proposals intersect with chip export restrictions.
China has asked the World Trade Organization to review semiconductor export controls recently announced by Japan, saying the “harmful” measures violate WTO rules. Beijing also lodged a broader complaint against the reported chip control deal agreed to by the U.S., the Netherlands and Japan, saying it should be made public and scrutinized by WTO members.
The U.S. should be preparing a strategy to make sure it leads in the next generation of advanced semiconductor technologies, said Romesh Wadhwani, founder of investment firm Symphony Technology Group. Wadhwani also said the funding included in the Chips Act is a good start, but likely won’t be enough to remain ahead of China and shield U.S. supply chains from geopolitical risks.
The European Commission will present ideas this year on a potential outbound investment screening regime, which could look to prevent European investments in sensitive Chinese technology sectors, Commission President Ursula von der Leyen said last week. She also said the EU will consider new trade restrictions on dual-use goods, including those that may be used for human rights abuses.
Japan last week said it plans to impose new export controls on certain semiconductor manufacturing equipment, a move that could align its restrictions with some of the sweeping China controls released by the U.S. in October. The Japanese restrictions will apply to 23 types of chip items and covering six categories of equipment used in chip manufacturing, including cleaning, deposition, lithography and etching, Reuters reported March 31.
Japan recently loosened export restrictions on shipments of hydrogen fluoride, fluorinated polymide and resists to South Korea following the end of a long-running trade dispute between the two countries. Japan's Ministry of Economy, Trade and Industry said it added the three items, which are high-tech materials used in smartphone displays and chips, to the scope of its "Special General Bulk Export License system," effectively lifting the restrictions. The announcement, which took effect March 23, comes after South Korea withdrew its dispute complaint at the World Trade Organization (see 2303240044 and 2303170015).
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.