U.S. exports of semiconductors to China fell by about $2.9 billion in 2022, “wiping out” growth the industry saw the year before, the U.S.-China Business Council said in a report this week. The decline was partly due to the Biden administration’s sweeping chip controls released in October (see 2210070049), the report said, adding that the “more frequent use of export controls over the last few years has led Chinese customers to deprioritize American products when there are viable domestic and third-country suppliers.”
Chip export news
Republicans leaders this week criticized China's decision to ban certain sales from U.S. chip company Micron (see 2305220053), saying the move was politically driven and lacked evidence.
The Chinese Ministry of Commerce said Japan's export control measures on 23 types of semiconductor manufacturing technology are an abuse of export control measures and departure from international trade rules, according to an unofficial translation. The ministry on May 23 urged Japan to immediately drop the controls, which it says are hindering the normal development of each country's semiconductor industry. Japan imposed the restrictions in late March, aligning with elements of U.S. restrictions on China (see 2303310031). The controls cover six categories of equipment used in chip manufacturing, including cleaning, deposition, lithography and etching.
China this week banned certain Chinese companies from purchasing products from U.S. semiconductor company Micron, saying they are a national security risk and shouldn’t be used in “critical information infrastructure” projects. The country’s cyberspace regulator said its infrastructure operators “should stop purchasing Micron products” after a Chinese government review found they have “relatively serious potential network security issues, which pose a major security risk” to China, according to an unofficial translation of a May 21 notice. “The purpose of this network security review of Micron's products is to prevent product network security issues from endangering the security of the country's key information infrastructure, which is a necessary measure to maintain national security.”
The leaders of the House Foreign Affairs Subcommittee on the Indo-Pacific are trying to pass legislation to give the president the ability to respond to economic coercion of allies, but Chair Young Kim, R-Calif., asked witnesses at a subcommittee hearing she convened to advise what else could be done to stand up to China's economic aggression.
The Committee on Foreign Investment in the U.S. is mitigating more investment deals and is hiring more staff to manage its increasing workload, said Paul Rosen, head of CFIUS. Rosen also said the committee is assessing more violations for breaches of mitigation agreements and is “for the first time” beginning to receive voluntary self-disclosures.
The U.S. should avoid placing export controls on cloud computing services to try to prevent Chinese companies from using a loophole that allows them to access controlled semiconductors, researchers said. Georgetown’s Center for Security and Emerging Technology and the Center for a New American Security explored this strategy in a new report released this week but said export controls don't “appear feasible and may have adverse consequences.”
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The Bureau of Industry and Security needs much more funding to carry out its export control work, lawmakers and former officials said during a House hearing this week. Kevin Wolf, a former senior official at BIS, said Congress should consider doubling -- perhaps quadrupling -- the agency’s resources.
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