Micron halted shipments to Huawei Sept. 14 to comply with the newest Trump administration export restrictions imposed mid-August on the Chinese company (see 2008170043), said CEO Sanjay Mehrotra on a fiscal Q4 call. Huawei had been a large Micron customer, about 10% of sales in Q4 ended Sept. 3, he told investors Tuesday.
Chip export news
Cree views 5G as a “multiyear expansion, with major traction coming,” said CEO Gregg Lowe on a Tuesday investor call. The company supplies silicon-carbide RF and power chips for 5G infrastructure applications. “There have been a number of recent announcements coming out of Asia pointing towards growing 5G momentum in that region. While the global pandemic has further delayed some rollouts in other regions, we continue to be well positioned to support this global expansion.” Cree stopped shipping to Huawei “for the better part of a year” after the Commerce Department’s export ban took effect, said Lowe: “We have no Huawei revenue plans in any of our future projections or forecasts.” Any “large impact” from Huawei, “we've basically taken it out of the picture,” he said. “We have developed good relationships with other players around the world and are repurposing the technology that we had developed for Huawei for those customers.” Lowe concedes the “Huawei situation was a pretty significant setback for us,” he said. “But we've adjusted our plans, we've adjusted our focus to go after non-Huawei customers.”
The U.S. needs to pour more resources into research and innovation of emerging technologies to boost commercialization and outpace Chinese technology development, said Sen. Marsha Blackburn, R-Tenn. She advocated for a methodical decoupling and reshoring manufacturing of critical technologies. “We have to realize that you can't just decouple from China and say, 'All right, we're severing.’ It is more like an unraveling,” Blackburn told the Hoover Institution Wednesday. “Whether it is critical supply chains for semiconductor chips or telecommunications equipment … we have become too dependent on China for manufacturing, and we need to return that capability and capacity to the United States.” The U.S. isn't investing enough in R&D, she said, and needs to form better partnerships between universities and corporations. Blackburn said “technology is going to be the nexus for so many areas of growth,” and the military needs to better innovate to compete with China’s civil-military fusion surrounding military applications for artificial intelligence and autonomous vehicles. “Our commercial sectors and our military sectors need to be innovating,” Blackburn said. “Our military complex needs to be utilizing the new concepts that are being pushed forward in the commercial area.” Blackburn said the U.S. can take steps beyond the Commerce Department's recently amending export administration regulations to let U.S. companies more easily participate in bodies in which Huawei is a member. She pointed to S-2528 to require the administration report on the “purpose, scope and means” of expanded Chinese influence on standards bodies. Friday, the White House, China's embassy in Washington and the Semiconductor Industry Association didn't comment.
The U.S. should impose stricter export controls on advanced chip manufacturing equipment to prevent China from getting more of its own semiconductor technologies, experts told the Commerce Department’s Information Systems Technical Advisory Committee meeting. Success of U.S. export controls depends on cooperation with allies, said Carrick Flynn and Saif Khan, research fellows with Georgetown University's Center for Security and Emerging Technology. “Doing this without full buy-in from all partners is going to be worse than doing nothing at all,” Khan said. “That always has to be an overriding principle." Khan predicts China needs “at least a decade” to develop industry-leading advanced semiconductor manufacturing equipment. Flynn suggested the U.S. take risks to prevent China from becoming the world’s leader in advanced technology development. “We do not want the Chinese government to have access to advanced computer chips,” he said. An artificial intelligence "arms race, or a hypersonic missile arms race, or any other technology arms race is not in the best interest of the United States or global security,” he said. China's Washington embassy didn't comment Thursday.
It's not enough to restrict sales of chips to Huawei, and convince allies not to use the Chinese company in their 5G networks, experts said at a Senate Banking Committee Economic Policy Subcommittee hearing Wednesday. Rather, they testified, both 5G and export controls should be looked at more broadly. Martijn Rasser, senior fellow in the Center for a New American Security's Technology and National Security Program, said 5G networks will be essential to all the U.S. does in technology, so getting it right is urgent. Of talk of the U.S. buying an equity stake in Nokia or Ericsson, or creating its own "national champion" company in telecom equipment, that's "nibbling at the edges of the question," he said: Networking is an oligopoly, "which is why I’m advocating for a whole new approach." Rasser suggests the U.S. should convince allies to support open radio access networks. He said U.S. companies are strong in software, and this approach would make the industry more competitive. Tim Morrison, senior fellow at the Hudson Institute, said the way to win the economic competition with China is through a trade agreement similar to the Trans Pacific Partnership, leaving developing countries out except Mexico, and adding the U.K. and South Korea. Michigan State University Economics professor Lisa Cook, who agrees intellectual property theft is a problem in China, said it's ironic, because Chinese inventors are receiving more and more U.S. patents to protect their own innovations. "On the other hand, when I was in China," she said, the people she met told her because China "is a developing country, it deserves to have intellectual property rights abrogated." Rasser said export controls on semiconductors aren't as effective as putting them on chipmaking equipment. China's embassy didn't comment.
The Committee on Foreign Investment in the U.S. is focused on sectors including semiconductors, monitoring Chinese firms that could try to evade recent stricter U.S. license restrictions on sales of chips and other technology to China and Huawei, trade lawyers said on a Crowell & Moring panel. Another expert called for a balanced U.S. approach to China, speaking on a podcast also released Tuesday. Adelicia Cliffe of Crowell & Moring said CFIUS is increasing scrutiny in an attempt to catch Chinese investors that “may take advantage of vulnerable companies that have been affected by the pandemic.” Cliffe expects “a lot of scrutiny, particularly in the technology sector, for smaller emerging companies that may be desperate for capital during this time.” CFIUS also is taking a closer look at transactions involving personal information and customer data sets, said Caroline Brown, also of the law firm. “But semiconductors, as we know, are front and center,” she said. “It'd be surprising if any deal involving a semiconductor target would not receive scrutiny on the basis of its critical technology.” Increasingly stringent CFIUS reviews and tight export controls against China are expected to continue regardless of the outcome of the upcoming presidential election, said Maria Alejandra del-Cerro, also of Crowell & Moring. “We've seen bipartisan support for export controls on new commercial technology to China. We've seen Democratic leaders just as active and questioning the Commerce Department's decision to issue certain export licenses … for Huawei,” she said. “That pressure on China would continue.” CFIUS didn't comment Wednesday. In Samm Sacks' work on Chinese issues, she keeps in mind that there's a paradox, she told the newly released Technology Policy Institute podcast. "How do we maintain the openness of the U.S. system" while "knowing that that openness has been exploited," asked New America Cybersecurity Policy and China Digital Economy Fellow Sacks. "Are we putting those guardrails in the right places? And I would argue that we probably aren’t right now, but we need them." She mentioned U.S. actions involving Huawei, chips and CFIUS investigating TikTok. TPI President Scott Wallsten called the latter company "a particularly fascinating case." The Chinese platform, which didn't comment now, "falls into all of these debates," noted Wallsten, the podcast's co-emcee. "On the other hand, it is providing direct competition to Facebook and Instagram and all of these companies that so many of the same people who are critical of China, those same people also worry about competition among big tech companies."
China promised countermeasures to respond to increased U.S. restrictions against Huawei, slamming “abuse of export controls” and violation of international trade laws. License requirements on shipments to Huawei for foreign-made chips containing U.S. content (see 2005180018) are a “serious threat” to China’s chip industry, China’s Commerce Ministry said Sunday, per an unofficial translation. State media said China is considering placing U.S. companies on its unreliable entity list. The rule will “complicate” operations for communication equipment manufacturers and could lead to drops in revenue and R&D efforts, emailed a U.S.-China Business Council spokesperson. “More transactions will require export licenses, adding additional expense and delays with no guarantee that licenses will be granted.” Chinese companies “of course would very much like to ... indigenize all aspects of the supply chain,” said Keith Krach, State Department undersecretary-economic growth, to reporters last week. “But at least for the moment … U.S. companies still have a very significant comparative advantage when it comes to the largely software-facilitated design tools that are involved in producing the very best chips.” National Foreign Trade Council Vice President Richard Sawaya said the rule falls short of industry’s worst fears, and members “realize that national security-related technology controls are warranted.” He said industry would have appreciated more transparency as the rules were being considered and a comment period. “That’s really what industry is asking for,” Sawaya told us: “Due process.” Monday, Huawei criticized the increased restrictions, saying they “ignore the concerns of many companies and industry associations.” It said the rule will “undermine” the global semiconductor industry. “The U.S. is leveraging its own technological strengths to crush companies outside its own borders,” the company said. Huawei’s rotating chairman, Guo Ping, said he's “confident” the company will work around the curbs. “Our experience over the past year has made us confident that we can find a solution, that our customers and suppliers can continue to stand with us and minimize the impact of this discriminatory rule,” he said. Sen. Ben Sasse, R-Neb., called the rule “long overdue.” The U.S. “needs to strangle Huawei,” Sasse said. “Modern wars are fought with semiconductors, and we were letting Huawei use our American designs.”
The Commerce Department announced increased restrictions on foreign-made chips exported to and made by Huawei. The department said Friday it doesn't expect to issue another temporary general license extension for the Chinese telecom gearmaker after its latest 90-day renewal expires Aug. 13. The agency is amending the direct product rule to apply restrictions to foreign-produced semiconductor designs and items, such as chipsets, that are direct products of controlled U.S. software and technology, and will require a license when the exporter has “knowledge” that the item’s destination is Huawei. To mitigate impact on the industry, Commerce said the rule change won't affect foreign-produced items as long as they're re-exported, exported from abroad or transferred within 120 days from the rule’s effective date. The company didn't comment.
Sen. Marsha Blackburn, R-Tenn., urged colleagues to “refuse meetings with any representatives of Chinese companies,” including telecom equipment makers Huawei and ZTE and app TikTok. The Commerce Department said Friday it’s increasing restrictions on foreign-made chips exported to and made by Huawei. The department also doesn’t plan to issue another temporary general license extension for the Chinese telecom gearmaker after its latest 90-day renewal expires Aug. 13 (see 2005150027). Lawmakers should refuse meetings with Chinese companies “regardless of whether they are state owned or claim to be privately run entities, and to exercise caution when accepting meetings with Chinese officials,” Blackburn said in a letter: The ban “is a long overdue sanction” after an existing ban on sales of Huawei and ZTE equipment to federal agencies and a block on TikTok’s use on government-issues devices of military and some federal personnel. The companies’ “representatives likewise cannot be trusted to lobby members of Congress with the best of U.S. intentions in mind,” she said: “Blacklisting China in Congress mirrors punitive steps the executive branch has already taken. The Committee on Foreign Investment in the United States routinely blocks Chinese acquisitions of American companies to guard against national security risks,” while Commerce “blacklists Chinese companies that enable human rights abuses or act contrary to U.S. foreign policy or national security.” Blackburn is among the lawmakers who helped shape anti-Huawei/ZTE legislation (see 1907220053).
The Commerce Department extended comments on future temporary general license extensions under export administration regulations by about a month to April 22, says Thursday's Federal Register. The feedback will determine “continuing need” and scope for future extensions for the temporary general license for Huawei, the department said Wednesday. Thursday, Reuters reported senior administration officials agreed to new measures to further restrict foreign exports of chips to Huawei. It's unclear if President Donald Trump will OK the change. The White House and Commerce Department's Bureau of Industry and Security didn't comment.