Three Sheppard Mullin lawyers, across two continents, say the outcome of the new aggressive stance against China's rising technological manufacturing sector is yet to be seen, but that they don't expect the Biden administration to back away from the most significant export control actions taken under President Donald Trump.

Intel will invest $20 billion to build two new semiconductor fabs in Arizona in a bid to become a “major provider of foundry capacity” in the U.S. and Europe, the company said March 23. It plans to use its expanded foundry capacity to “serve the incredible global demand for semiconductor manufacturing” and to partner with IBM to better research and develop next-generation packaging technologies.

The U.S. should be doing more to restrict Chinese semiconductor companies from buying U.S. equipment, which is strengthening China’s military and ceding U.S. technology leadership, researchers said. Although the U.S. should bolster domestic policies to help the semiconductor industry -- including through supply chain, manufacturing and research incentives (see 2102240052) -- the researchers said the Commerce Department’s export controls include loopholes for companies that sell advanced technologies to China.

Commerce Department Secretary Gina Raimonndo said she had a “productive” meeting with the Semiconductor Industry Association last week and agreed that the U.S. should push for “strong investments” in domestic semiconductor manufacturing and innovation. “Semiconductors are America’s fourth largest export, and critical to our economic competitiveness and national security,” Raimondo said in a March 19 statement, adding that the meeting with SIA’s board of directors is the beginning of an “ongoing dialogue” between Commerce and industry leaders. “[O]ver the years we have underinvested in production and hurt our innovative edge, while other countries have learned from our example and increased their investments in the industry,” Raimondo said. “As Secretary of Commerce, combatting the semiconductor shortage and investing in American manufacturing of semiconductor technology is going to be a priority of mine.”

The Commerce Department should expand export restrictions on China’s top chipmaker to prevent it from accessing a broader range of semiconductor manufacturing equipment, two U.S. lawmakers said. In a March 18 letter to Commerce Secretary Gina Raimondo, Sen. Marco Rubio, R-Fla., and Rep. Michael McCaul, R-Texas, asked the agency to apply the foreign direct product rule to China’s Semiconductor Manufacturing International Corporation, which would restrict the company’s ability to import certain foreign-made semiconductor equipment that is built with or that incorporates U.S. technology. The move would subject SMIC to similar restrictions imposed by the Bureau of Industry and Security on other Chinese companies on the Entity List, including Huawei (see 2012210044).

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The Biden administration has imposed tighter conditions on previously approved export licenses for some Huawei suppliers, Bloomberg reported March 11. The increased restrictions, which took effect last week, “create a more explicit prohibition on the export” of semiconductors and other components for use in Huawei’s 5G devices, and aim to make the Commerce Department’s export restrictions “more uniform among licensees,” the report said. The move is the latest sign that the Biden administration plans to continue a strict Huawei export licensing policy, which began under the Trump administration and ended with a flurry of license denials during President Donald Trump’s final days in office (see 2101150062). A spokesperson for the Bureau of Industry and Security, which oversees the license applications, said it can't comment on licensing decisions due to “confidentiality provisions.”

The U.S. needs to immediately modernize export controls and foreign investment screening mechanisms to counter Chinese technology advancement, a U.S. commission told Congress. The members of the National Security Commission on Artificial Intelligence, building off a report it released earlier this month, told lawmakers March 12 that the U.S. is in danger of ceding technology leadership over artificial intelligence if it doesn’t devote more resources to innovation and create a clearer national technology strategy.

The Chinese and American semiconductor industry associations will establish a China-U.S. semiconductor working group to streamline information sharing between the two industries, and exchange policies on export controls, supply chain security, encryption and other trade restrictions. The move was announced March 11 on the China Semiconductor Industry Association's website, according to an unofficial translation. The group plans to meet twice a year to address the most pressing issues surrounding semiconductors, including the current global shortage of the key technology, it said. Following the negotiations, each association will appoint 10 member companies to participate in the working group. CSIA is a state-backed association of 774 Chinese semiconductor-related businesses. Its American counterpart is the Semiconductor Industry Association, whose stated mission is lobbying “to strengthen U.S. leadership in semiconductor manufacturing, design, and research.” Neither group has announced participants for the working group.

The Bureau of Industry and Security is seeking comments on ways the agency can help boost the competitiveness and capacity of the U.S. semiconductor industry, according to a notice issued March 11. The comments, due April 5, will help inform the Commerce Department’s policy recommendations to the White House as part of a February executive order to address supply chain shortages of semiconductor chips (see 2102240068).