Twenty-one technology, auto and business groups urged the House and Senate to quickly negotiate a compromise for their China competition bills that would authorize funding for the Chips Act and other domestic semiconductor sector investments. The Democratic and Republican leaders in the Senate and House should “take immediate action to reconcile the two bills” and send a passed version to President Joe Biden, the groups said in a Feb. 16 letter signed by the Semiconductor Industry Association, SEMI, the U.S. Chamber of Commerce, the American Automotive Policy Council and others.

The Commerce Department should add more Chinese companies to the Entity List, better restrict China’s government organizations and target the country with unilateral controls when appropriate, China Tech Threat said this week. The organization, which is run by Strand Consult and advocates for stronger export controls on China, said Commerce should add China semiconductor companies Yangtze Memory Technologies and Changxin Memory Technologies to the Entity List and tailor export controls to better target Chinese “pseudo-government organizations.” Commerce should also “prioritize” unilateral controls on American semiconductor manufacturing equipment by employing a “control-now-cooperate-later” approach, China Tech Threat said.

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 the title or by clicking on the hyperlinked reference number.

The U.S. Court of Appeals for the Ninth Circuit affirmed a California district court ruling dismissing a case brought by investors in U.S. semiconductor developer Qualcomm over an alleged scheme by the American company to illegally block Singapore firm Broadcom's bid to take over Qualcomm. Investors had argued Qualcomm had improperly lobbied lawmakers and the Committee on Foreign Investment in the U.S. to block the acquisition.

Important questions still surround the implementation of a potential multilateral sanctions package against Russia, economic and security experts said, including U.S. efforts to enforce an expansion of the foreign-direct product rule. Although details may not yet be clear, a former State Department official warned that new U.S. sanctions against Russia could soon turn strict enough to mirror trade restrictions against Iran.

The Russian government planned to meet with about 100 domestic electronics manufacturers, consumers and financial firms Feb. 12 to discuss methods to avoid various trade restrictions imposed by foreign countries, according to an unofficial translation of a Feb. 11 report from the Russian daily Kommersant. The talks, planned as Russia prepares a military invasion into Ukraine, were expected to include a “strategic session” on how the Russian companies can “diversify import channels” to mitigate the restrictions. Officials were to speak about “adjusting measures to support electronics manufacturers, developing independent chip production in Russia, as well as the prospects for import substitution in the segment of laptops, workstations and servers,” the report said. Companies expected to participate include SberBank, Rostelecom, Baikal Electronics and Rostec. The U.S., the European Union and others are preparing a new set of export controls and sanctions against Russia if it further invades Ukraine (see 2201250042).

Q4 revenue at China’s largest chipmaker, Semiconductor Manufacturing International Corporation, jumped 61.1% year over year to $1.58 billion, and its quarterly profit was $552.8 million, increasing 212.7% from Q4 2020, despite being added to the Commerce Department’s Entity List in December 2020 (see 2012180039), the company reported Feb. 10. It was an “exceptional year in SMIC's development history,” it said. The global shortage of chips and the strong demand for “local and indigenous manufacturing” brought SMIC “a rare opportunity,” while the U.S. export restrictions of the entity list “set many obstacles to the Company's development,” it said. “Focusing on the primary task of ensuring operation continuity, meeting customer demand, and alleviating the supply chain shortage, the Company rose to the challenge, tackled difficulties precisely and achieved sound performance.”

Sahar Hafeez has left the Bureau of Industry and Security to begin a new role this week as National Security Council director of international economics. As a senior adviser in the office of the BIS undersecretary, she contributed to the agency’s work on semiconductor supply chain issues (see 2107280051) and other areas.

The European Commission announced plans this week to increase investments and incentives for its semiconductor industry and establish a more reliable chip supply chain to reduce dependence on foreign suppliers. The plans also could lead to more export control measures over sensitive chip products in response to domestic shortages or unfair foreign trade policies.

Companies could face a variety of compliance challenges if the U.S. expands its foreign direct product rule to capture exports to Russia, Cooley's Annie Froehlich, an export control lawyer, said in a Feb. 3 Atlantic Council blog post. The U.S. has reportedly considered using the rule if Russia further invades Ukraine, which could limit Russia’s ability to import certain foreign-produced chips, integrated circuits and microprocessors, the post said. “If regulatory actions are imposed, assessing exposure and implementing appropriate compliance responses will be challenging.”