More than 20 industry groups urged the Bureau of Industry and Security to be cautious as it considers controls over foundational technologies (see 2008260045), saying the wrong approach could stifle innovation, damage U.S. competitiveness and lead to costly shifts in global supply chains. The groups said any new controls should only be imposed after a calculated process with significant input from industry, and should include license exceptions and exclusions.
Semiconductor Manufacturing International Corporation (SMIC) has “deep regret” about the Trump administration’s imposition of national security export restrictions on China’s largest chipmaker (see 2009280022), Chairman Zhou Zixue said on a Q3 investor call Nov. 11. Though the restrictions “will have an impact on SMIC in the near term, we believe it’s manageable,” he said. “We will continue to follow up on this matter and further evaluate the impact. The company will maintain close cooperation with suppliers and customers and continue to maintain active communication with the relevant department of the United States government working to resolve possible differences.”
When the Joe Biden administration takes office, it will likely continue the Commerce Department's emphasis on export controls and entity listings to stay ahead in technology competition with China, said Eric Sayers, an Asia-Pacific policy expert with the Center for a New American Security. Although both tools have been heavily used by the Trump administration, Biden might do more to convince allies to also impose those restrictions, especially as the U.S. fights to maintain commercial leadership in the semiconductor sector, Sayers said.
Microchip Technology Inc. halted all Huawei shipments in mid-September in compliance with further Commerce Department export restrictions on the Chinese tech giant imposed in August (see 2008170029), President-Chief Operating Officer Ganesh Moorthy said on a Nov. 5 investor call for fiscal Q2 ended Sept. 30. Huawei was the source of about 2% of Microchip’s Q2 revenue, down sequentially from Q1, according to Moorthy, who will succeed Steve Sanghi as CEO March 1, 2021, as Sanghi transitions to executive chairman. Microchip is working with Commerce “to apply for licenses for products and technologies that we believe have no impact” on U.S. national security, Moorthy said. “We do not know if or when such licenses may be granted,” so Microchip assumes no Huawei revenue in the fiscal third quarter ending Dec. 31, he said. Huawei's push to complete manufacturing of all products before the shipment ban took effect caused wide-scale supply-chain “constraints” during the September quarter, he said. The rush of its competitors to replace the business Huawei lost “further stressed the supply chain,” he said. The “ongoing shift” of semiconductor manufacturing out of China to avoid the Section 301 tariffs also pressured “the capacity in other Asian countries where we manufacture through our partners,” he said. The supply chain disruptions “are continuing into the December quarter,” he said.
The European Union is increasingly losing out in technology competition with the U.S. and China, technology and trade experts said during a Nov. 6 event hosted by Chatham House. While they suggested more EU cooperation with the U.S., they also said Europe needs a different approach to technology regulation to keep from falling further behind.
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, will no longer lead the committee even if Republicans retain the majority in the Senate. The Republicans have term limits for committee chairmanships, so he will move on. Sen. Mike Crapo, R-Idaho, is the most senior member of the committee, and thus is the next expected chairman, though that move has not yet been settled.
A Taiwanese chipmaker pleaded guilty and was fined $60 million for conspiring to steal trade secrets from a U.S. semiconductor company, the Justice Department said Oct. 28. Taiwan-based United Microelectronics Corp. (UMC) allegedly tried to steal intellectual property from U.S.-based Micron Technology to benefit Fujian Jinhua Integrated Circuit, a Chinese state-owned company. The $60 million fine was the “second largest ever” in a U.S. criminal trade secret prosecution, the Justice Department said.
The Congressional Research Service issued a report Oct. 26 on U.S. semiconductor policy and global competition, including an analysis of the semiconductor supply chain, the current industry landscape and semiconductor-related legislation. Congress has introduced multiple bills to provide federal funding and incentives for the semiconductor industry (see 2007240010), but questions remain about how large federal tax benefits should be, how much the federal government should invest in research and development, and how long the funding and incentives should be sustained, the CRS said. The U.S. should also consider how partners and adversaries would respond to moves such as federal investment in R&D-related activities such as workforce training or federal spending to “ensure a domestic production source for some or all national security applications,” and whether the efforts should be made in collaboration with other “like-minded” countries “to incentivize R&D and supply chains and to counter China’s state-led policies.”
China has met 71% of its 2020 purchase goals for U.S. agricultural commodities under the phase one trade deal, the Office of the U.S. Trade Representative and the U.S. Department of Agriculture said in an “interim report.” The Oct. 23 report, released 11 days before the election, said the U.S. is on track for its “best year ever in sales to China.”
The U.S. should sign a trade deal with Taiwan and increase cooperation on export controls, similar to U.S. partnerships with Japan and Australia, Asia experts at the Center for Strategic and International Studies said. Increased collaboration with Taiwan has strong support from Congress and the Taiwanese government, the experts said, and would make sense as the U.S. welcomes manufacturing and investment from Taiwan.