Huawei is increasing its investments in local chip companies to stabilize its supply chain amid a host of U.S. export restrictions on the company, the Nikkei Asia newspaper reported Jan. 13. Since being cut off from certain imports from many global semiconductor suppliers, the company has invested in 20 semiconductor-related companies during the past year and a half, the report said, and is building a “small-scale chip production line for research purposes” in Shenzhen, China. Ten of Huawei’s recent investments came after the U.S. amended its foreign direct product rule in May to further restrict Huawei’s ability to source foreign-made products containing a certain amount of U.S.-origin goods (see 2008170029), the report said. Nikkei also said Huawei is receiving government support to find new “targets for investments,” with one being China-based SiEn Integrated Circuits Co., Ltd. The investment would help Huawei with a range of chip services, the report said, including design, production, packaging and testing. Huawei didn’t comment.
Japan is seeking “participants” for a project to pursue research and development for 5G infrastructure and advanced semiconductor manufacturing technology, the country’s Ministry of Economy, Trade and Industry said Jan. 8. The project is being run by Japan’s New Energy and Industrial Technology Development Organization, which is hoping to “strengthen” Japan’s semiconductor manufacturing abilities, the ministry said, according to an unofficial translation. The agency is carrying out an “open call for development” of those technologies and will select certain businesses to participate in the project. The recruitment period, which began Jan. 8, ends Feb. 8.
The Treasury and State departments issued guidance on President Donald Trump’s November decision to ban investment in Chinese firms with ties to the country’s military. Treasury issued a list of Chinese military companies and published five new frequently asked questions to offer compliance on the ban, which takes effect Jan. 11, 2021 (see 2011130026).
The Bureau of Industry and Security this month released the full set of comments it received on its pre-rule for foundational technologies (see 2008260045 and 2010070012), including hundreds of pages of feedback from U.S. and global semiconductor companies urging the agency to refrain from imposing narrow, unilateral export controls. BIS also received comments from some of the world’s largest technology companies, including Google and Microsoft, both of which told BIS that its controls could create unmanageable problems for compliance programs.
Sen. Marco Rubio, R-Fla., is concerned that Huawei is evading U.S. export restrictions on semiconductors and ordering them from U.S. companies with the intent to ship them in case those companies are granted export licenses, he said in a Dec. 17 letter to Commerce Secretary Wilbur Ross. Rubio asked Ross to provide information on how many individual export licenses Commerce has approved for U.S. semiconductor manufacturers to Huawei and whether it would be legal for U.S. companies to “stockpile” items for eventual export to Huawei pending a licensing decision, or to “receive compensation from Huawei for doing so.” Rubio also asked whether the administration plans to remove Huawei from the Entity List. A Commerce spokesperson pointed to Ross's statement last week, in which he said the U.S. will continue to use Entity List restrictions to prevent China's military from acquiring sensitive semiconductor equipment.
The Bureau of Industry and Security published a set of frequently asked questions to provide industry guidance on its summer update to the foreign direct product rule, which increased restrictions on certain foreign-made items (see 2009170026). The guidance, issued this week, features FAQs that cover how the restrictions apply to companies and products, and how they impact prior exports, manufacturing plants, supply chains, prior licenses and more. BIS also outlined how the restrictions may apply to various scenarios faced by industry, including licensing responsibilities and due diligence requirements.
The Bureau of Industry and Security added 77 entities and people to the Entity List, including China’s top chipmaker, to further prevent China and other countries from acquiring sensitive U.S. technologies, the agency said Dec. 18. Along with China’s Semiconductor Manufacturing International Corporation, the Entity List additions include China-based DJI, one of the world’s largest drone makers, and companies in Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia and the United Arab Emirates.
The Bureau of Industry and Security will add China’s Semiconductor Manufacturing International Company and more than 60 companies to the Entity List for actions “deemed contrary” to U.S. national security. BIS said SMIC, China’s top chipmaker, has concerning ties to China’s government and risks transferring imported U.S. technology to the country’s military. Other companies will be added to the Entity List for human rights abuses, for supporting China’s militarization of the South China Sea, for diverting U.S. products to China’s military and for the theft of U.S. trade secrets. BIS did not immediately say when the restrictions will take effect.
China is a threat to the U.S., Sen. Tom Cotton, R-Ark., said, and he said there's a risk that “the next administration could roll back much of the progress we’ve made the past few years, in an attempt to return to the failed dream of engaging and accommodating China.” Cotton, the chairman of the Senate Banking Committee Subcommittee on Economic Policy, led a subcommittee hearing Dec. 16 on U.S.-China Economic Competition. Cotton said during the hearing that export controls must be tightened.
The Commerce Department published its fall 2020 regulatory agenda for the Bureau of Industry and Security, including new mentions of rules to amend Hong Kong under the Export Administration Regulations, releases of controlled technologies to standards setting bodies and a range of new technology controls.