The top Republican on the House Foreign Affairs Committee said the acting head of the Bureau of Industry and Security misrepresented facts in front of a congressional commission last week (see 2109080062), saying he wasn't straightforward about the agency’s “delayed and incomplete” provision of export licensing decisions to Congress. Although BIS Acting Undersecretary Jeremy Pelter told the commission that BIS has complied with all laws regarding the disclosure of licensing information to Congress, Rep. Michael McCaul said the agency hasn’t been transparent.

In a strategic meeting called a high-level economic dialogue, Mexico and the U.S. talked about ways to facilitate the movement of goods at the border and ways to use Mexico in a North American-centric semiconductor supply chain, officials said after the Sept. 9 meeting. Mexico could become a place for packaging and testing chips, Mexico's Economy Secretary Tatiana Clouthier said at a press conference at the Mexican Embassy.

U.S. penalties for illegal exports to China have risen dramatically this year compared with last, with about $6 million in fines handed out already, said Jeremy Pelter, the acting undersecretary for the Bureau of Industry and Security. Pelter told a bipartisan congressional commission this week that the agency during the 2021 fiscal year has issued about $1.86 million in criminal fines and more than $4 million in civil fines, skyrocketing past 2020’s penalties, which totaled about $60,000.

China’s Semiconductor Manufacturing International Corp., which was placed on the Commerce Department’s Entity List last year, plans to build a nearly $9 billion chip production facility in Shanghai to help bolster China’s semiconductor ambitions, the Wall Street Journal reported Sept. 3. The facility will be built through a joint venture between SMIC and the Shanghai government, and will specialize in “mature technologies of 28-nanometer process nodes and higher and churn out 100,000 12-inch wafers a month when complete,” the report said, citing a SMIC regulatory filing. SMIC, which is also on an unclassified Defense Department list of Chinese military companies (see 2106280023), has come under intense scrutiny from some lawmakers, who view it as a threat to U.S. semiconductor leadership (see 2103190005).

The Commerce Department’s delay in issuing emerging and foundational technology controls may not be hampering U.S. foreign investment reviews as much as some lawmakers have suggested, trade lawyers said. Although the Committee on Foreign Investment in the U.S. doesn’t yet have a clear set of Commerce-defined critical technologies to target, that has not slowed down CFIUS from catching non-notified deals in critical technology sectors, the lawyers said in interviews, especially those involving semiconductors (see 2109010051).

The proposed merger between Magnachip Semiconductor and Wise Road Capital (see 2106150039) was likely never going to avoid U.S. scrutiny, a trade lawyer said, and it is puzzling why the two companies didn’t voluntarily submit a declaration to the Committee on Foreign Investment in the U.S. Scott Flicker, who advises clients on CFIUS matters for Paul Hastings, said the decision was either a mistake or a calculated decision by the two companies’ lawyers.

The Committee on Foreign Investment in the U.S. plans to refer a heavily scrutinized transaction to President Joe Biden after it couldn’t identify measures to mitigate the deal’s national security risks. The proposed acquisition of South Korea-based Magnachip Semiconductor Corp. by Beijing-based Wise Road Capital (see 2106150039) could damage U.S. national security, CFIUS told both companies Aug. 27, according to Magnachip’s Aug. 30 Securities and Exchange Commission filing. Although Magnachip and Wise Road had proposed mitigation measures to CFIUS, the committee said it couldn’t agree to any measures that “would adequately mitigate the identified risks.”

After several Republican lawmakers criticized the Biden administration for reportedly approving hundreds of millions of dollars worth of license applications for auto chips exports to Huawei (see 2108260014), the Commerce Department stressed that the Chinese technology company remains subject to strict licensing policies. A Commerce spokesperson said the administration hasn’t changed any of the regulatory restrictions imposed against Huawei or the policies “for implementing those restrictions” introduced under the Trump administration. “The policy has not been eased or amended,” the person said last week. The spokesperson also said all license applications are reviewed by the Defense, Energy and State departments.

Several Republican lawmakers criticized the Biden administration this week for reportedly (see 2108250018) granting export licenses for companies to ship hundreds of millions of dollars worth of auto chips to Huawei. The licenses reportedly were approved within the past several months and authorized only exports of auto chips, which are viewed as less sensitive than other types of semiconductor-related items.

The U.S. in recent months has approved license applications for exports of auto chips to Huawei worth hundreds of millions of dollars, Reuters reported Aug. 25. The approved applications have involved licenses to sell chips for various “vehicle components,” including video screens and sensors. License applications for exports of auto chips have faced lower thresholds for approval because they are “generally not considered sophisticated,” the report said. Huawei told Reuters it is “positioning” itself “as a new component provider for intelligent connected vehicles.” Huawei is subject to strict export license requirements (see 2104130041 and 2008170029).