The U.S. “firmly” opposes export controls by China on certain metals used to produce semiconductors, a Commerce Department spokesperson said July 6. “These actions underscore the need to diversify supply chains,” the person said in an email. “The United States will engage with our allies and partners to address this and to build resilience in critical supply chains.”
As the U.S. continues to expand its chip export controls, South Korean and other multinational firms with semiconductor investments in China “face an uncertain future,” the Peterson Institute for International Economics said in a report this week. The report, authored by PIIE senior fellow Martin Chorzempa, outlines both the “collateral damage and new opportunities” for South Korean companies as a result of the Commerce Department's Oct. 7 controls (see 2210070049), saying Korean firms “have been some of the most impacted non-Chinese firms due to their large memory chip production facilities in China.” The report also recommends the U.S. do more to “reduce uncertainty” for allies operating in the region.
The Bureau of Industry and Security could use its existing “catch-all controls” to tighten restrictions around exports of sensitive artificial intelligence models, eliminating the need to develop new regulations to address emerging AI export risks, researchers with Georgetown University's Center for Security and Emerging Technology said this week. The researchers said the catch-all controls -- which allow BIS to restrict exports if there is “knowledge” the item will be used in certain dangerous ways -- may be “sufficient” to “address the use of AI in more traditional national security realms.”
China implemented export restrictions on gallium- and germanium-related items, which are used to make semiconductors and other key technology, the Chinese Ministry of Commerce announced, according to an unofficial translation. The restrictions will start Aug. 1 and are to protect China's national security, the ministry said. China is the top producer of the two metals, which are also used in solar panels, lasers and night-vision goggles. Gallium and germanium exporters will be required to apply for a license and report on their international buyers.
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The U.S. is “overstretching the national security concept” and “abusing export control tools,” a spokesperson for China’s Foreign Ministry told reporters June 30, according to a transcript in English of the regular press conference where the comment was made. The spokesperson, asked about recent steps taken by the Netherlands to restrict exports of advanced semiconductor manufacturing equipment (see 2306300028) and potential future controls imposed by the Biden administration (see 2306290048), said the U.S. is “using all sorts of pretexts to cajole or coerce other countries into joining its technological blockade against China.” The country will “closely monitor relevant developments and firmly defend our lawful rights and interests.”
The Netherlands last week published new export controls over certain advanced semiconductor manufacturing equipment in a step aimed at bringing Dutch policies more closely in line with strict U.S. export licensing requirements against China. The measures, previewed by the government in March (see 2303090032), take effect Sept. 1 and will require exporters to apply for and receive an authorization before shipping a “number of very specific technologies for the development and manufacture of advanced semiconductors.”
The Biden administration is still considering a range of “very technical questions” on its upcoming outbound investment restrictions, which is partly why the rules haven’t yet been released, said Mike Pyle, deputy national security adviser for international economics. He said officials are still working through how to define the types of technologies that would be captured by the program and the types of investments that would be screened, and are still speaking with industry about how to best scope the restrictions.
New potential U.S. export controls on a broader set of artificial intelligence-related chips could have massive impacts on the chip industry and American chipmaker Nvidia, said Colette Kress, Nvidia’s chief financial officer. Kress, speaking about reports that the Biden administration could tighten existing chip export restrictions as it prepares to finalize its China chip export control rule from October, said new license requirements could deal permanent damage to American chip industry sales in China.
Proposed U.S. guardrails around the Chips Act aren’t likely to stop semiconductor companies from applying for funding, Michael Schmidt, the Commerce Department official in charge of the program, said this week. While Semiconductor Industry Association CEO John Neuffer agreed, he also urged the government to coordinate any chip-related restrictions with trading partners or risk U.S. companies losing Chinese market share, calling the idea of decoupling a “protectionist fairy tale.”