The Taiwan Semiconductor Manufacturing Co. said it will stop chip shipments to Huawei due to the Bureau of Industry and Security's increased license restrictions, Nikkei Asian Review reported July 16. TSMC Chairman Mark Liu said the company has not taken any new orders from Huawei since BIS issued a rule May 15 increasing restrictions (see 2005150058), the report said. “Although the regulation just finished its public comment period, the BIS did not make a final ruling change. Under this circumstance, we do not plan to ship wafers [to Huawei] after Sept. 14,” Liu told investors at a conference, according to the report. TSMC did not comment. Liu did not say whether TSMC plans to apply for export licenses. The company recently announced plans to build a chip factory in Arizona (see 2005150033). U.S. lawmakers are concerned that could disadvantage U.S. chip companies if TSMC is awarded unfair subsidies (see 2005200030 and 2005270030).
Chip export news
It's unclear how a President Joe Biden would try to use policy to shape the global supply chain, but the Atlantic Council's Asia Security director said that since Biden prefers a multilateral approach, he “might be less likely” to impose tariffs or export controls. Miyeon Oh, who was speaking during an Atlantic Council webinar June 26, said he might try to get allies to coordinate an effort “to rebalance the global supply chain,” and he might seek to use American participation in the Trans-Pacific Partnership as a way to do so.
Clete Willems, former White House deputy assistant to the president for international economics, believes the U.S. must convince allies to present a unified front to China on industrial subsidies, censorship and cybersecurity issues. Willems, who is now a lobbyist with Akin Gump, was speaking during a June 12 online program of the Asia Society. When it's just the U.S. arguing for reforms, he said, China can portray it as the U.S. trying to keep China down. But, he said, it might be possible to get China to change, “if we are able to portray them as an international outlier, which I think they are.”
U.S.-China technology competition and the Trump administration’s restrictions on Huawei have likely dashed the prospects of a phase two trade deal, China experts said. The experts also agreed that the phase one purchase agreements are unlikely to be met, even as the U.S. trade representative continues to tout progress on Chinese purchase commitments (see 2005210036).
Export Compliance Daily is providing readers with some of the top stories for June 1-5 in case you missed them.
The U.S. semiconductor industry is preparing to lobby for billions of dollars in federal funding amid growing U.S. technology competition with China, according to a May 31 report in The Wall Street Journal. The lobbying efforts, outlined in a $37 billion draft proposal by the Semiconductor Industry Association, includes funding for a new U.S. chip factory and increased research subsidies, the report said. The SIA declined to comment.
The U.S. government decision to increase license requirements for certain foreign exports to Huawei may damage U.S. companies more than Huawei and China, experts said. The same may be true for sanctions being prepared against China for interference with Hong Kong’s autonomy (see 2005220011), the experts said, which may present a large challenge for U.S. businesses. “If the administration follows through on the kinds of threats that they’re talking about … it will have a hugely negative impact on U.S. companies operating there, it will have a hugely negative impact on the people of Hong Kong, and it will have a minuscule effect on China,” said Nicholas Lardy, a Chinese economy expert at the Peterson Institute for International Economics.
Thailand recently increased its import quota for fresh potato imports, creating opportunities for U.S. potato exporters, according to a U.S. Department of Agriculture Foreign Agricultural Service report released May 20. Thailand increased its quota from 52,000 metric tons to 58,400 metric tons for 2020 due to “insufficient supply” for further processing, the report said. The import window for potatoes for chip processing is July 1 to Dec. 31 annually.
The Taiwan Semiconductor Manufacturing Company declined to say whether it has stopped processing new orders for Huawei and said it is still reviewing new U.S. export restrictions issued last week (see 2005150058). In a statement, a TSMC spokesperson said the company does not comment on details relating to customer orders but said it has “always complied with the law. The company said it has hired outside counsel to “conduct legal analysis and ensure a comprehensive examination and interpretation” of the new restrictions. “The semiconductor industry supply chain is extremely complex,” the spokesperson said. “TSMC is following the U.S. export rule change closely.”
China said it will take countermeasures to respond to increased U.S. export restrictions against Huawei, calling the changes an “abuse of export controls” and a violation of international trade laws. The restrictions, which place a license requirement on shipments to Huawei for foreign-made chips containing U.S. content, are a “serious threat” to China’s chip industry and supply chains, China’s Commerce Ministry said May 17, according to an unofficial translation. The ministry did not specify what the countermeasures will entail, but state media said China is considering placing U.S. companies on its so-called unreliable entity list and stopping purchases of aircraft from Boeing (see 2005150058).