The U.S. should have placed export controls on a broader range of semiconductors, including legacy chips, as part of its efforts over the last year to restrict sales of advanced semiconductors to China, said Nazak Nikakhtar, a former acting Bureau of Industry and Security undersecretary. She said a lack of legacy chip controls is allowing China to dominate that sector of the industry and grab market share away from companies in the U.S. and its allies, including South Korea and Taiwan.
Chip export news
The Bureau of Industry and Security is planning to soon issue a rule that will offer clarifications and corrections to its recently updated export controls on advanced semiconductors and chipmaking equipment, said Thea Kendler, the agency’s assistant secretary for export administration (see 2310170055).
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The U.S. should convince Japan, the Netherlands and other allies to restrict exports of lower-level chipmaking equipment to China to prevent Beijing from becoming the global leader in the "foundational" semiconductors those tools can produce, the Silverado Policy Accelerator think tank said in a new report last week. The report warned that current restrictions on advanced equipment risks pushing China to instead dominate the foundational chip sector, which will increase the likelihood that those semiconductors will be incorporated in U.S. defense technologies and could help Chinese companies “climb the value chain in leading-edge nodes, whether through legitimate or illegitimate means.”
The reporting requirements being considered by the Treasury Department as part of its upcoming outbound investment rules (see 2308090066 and 2310050035) are "quite broad,” Akin Gump lawyer Laura Black said, adding that they will require companies to report on how certain investments fit into their business plans in the U.S. as well as the contractual and government relationships held by their Chinese clients. Black, speaking during an Oct. 25 webinar hosted by the Massachusetts Export Center, said those requirements could increase compliance costs for U.S. companies and create challenges for their Chinese partners, who are subject to strict disclosure laws by the Chinese government.
The Bureau of Industry and Security on Nov. 6 will hold a public briefing on its recently updated export controls on advanced semiconductors and chipmaking equipment (see 2310170055). The briefing, which also will cover the agency’s addition this month of 13 Chinese semiconductor and technology companies to the Entity List (see 2310170063), will be led by Assistant Secretary for Export Administration Thea Kendler, who will “address important aspects” of the new restrictions.
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.
The U.S. government has informed American chip designer Nvidia that several of its products are subject to the new export controls unveiled by the Bureau of Industry and Security last week despite BIS saying the rules wouldn’t take effect until next month.
The U.S. is not using its export controls for “economic protectionism” and is committed to a narrow, “targeted” approach to restrictions on advanced technologies, Bureau of Industry and Security Undersecretary Alan Estevez said in Japan last week. “We are laser focused on national security, and the controls we put in place are focused on select advanced technologies that have strategic applications,” Estevez said during the Mount Fuji Dialogue, an annual summit of U.S. and Japanese representatives. “We are strictly adhering to the small yard, high fence concept in applying our export controls.”
Although Dutch semiconductor equipment company ASML doesn’t expect the new U.S. export controls on China to have a “material effect” on the firm's financial outlook for 2023, it's preparing for the new rules to restrict more sales of its chipmaking equipment.