The Justice Department plans to announce more indictments involving cases of Chinese technology theft before the Joe Biden administration takes over in January, top U.S. security officials said. Under the agency’s China initiative (see 2008130036), the U.S. has targeted and arrested Chinese nationals for trying to steal export-controlled technology, an effort that has resulted in more than 1,000 Chinese researchers leaving the country since July, said John Demers, the U.S. assistant attorney general for national security.
The Defense Department plans to add several more Chinese companies, including its top chipmaker, to a blacklist of firms with ties to the country’s military (see 2011230007), Reuters reported Nov. 29. The additions to the list, which have not yet been published, include Semiconductor Manufacturing International Corporation, China National Offshore Oil Corp. (CNOOC), China Construction Technology Co. Ltd. and China International Engineering Consulting Corp., Reuters said. The companies will likely fall under President Donald Trump’s November executive order to ban Americans from investing in Chinese military companies (see 2011130026).
The board of directors of the Semiconductor Industry Association elected Qorvo CEO Bob Bruggeworth and Qualcomm CEO Steve Mollenkopf as the group’s chair and vice chair, respectively, for 2021, SIA said in a Nov. 19 press release. SIA President John Neuffer said both are “dedicated industry leaders and accomplished champions for chip technology,” adding that they will “greatly benefit” SIA as it pursues “industry priorities in Washington and capitals around the world.”
Cordell Hull, who has led the Bureau of Industry and Security for the last year (see 1911180040), will resign next month ahead of the incoming Joe Biden administration. His last day will be Dec. 4, a BIS spokesperson said. “I am proud of what we have achieved on important issues of national security at BIS and I have decided to look for the next challenge in the private sector,” Hull said in a Nov. 19 statement. “I am grateful to Secretary [Wilbur] Ross for giving me this opportunity to serve.”
The U.S. needs to work closer with allies on export controls and foreign investment screening to counter China, a Republican House member and two former Trump administration officials said. They said the U.S.’s current unilateral approach to trade restrictions is not working and could cede U.S. technology leadership to China.
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More than 20 industry groups urged the Bureau of Industry and Security to be cautious as it considers controls over foundational technologies (see 2008260045), saying the wrong approach could stifle innovation, damage U.S. competitiveness and lead to costly shifts in global supply chains. The groups said any new controls should only be imposed after a calculated process with significant input from industry, and should include license exceptions and exclusions.
Semiconductor Manufacturing International Corporation (SMIC) has “deep regret” about the Trump administration’s imposition of national security export restrictions on China’s largest chipmaker (see 2009280022), Chairman Zhou Zixue said on a Q3 investor call Nov. 11. Though the restrictions “will have an impact on SMIC in the near term, we believe it’s manageable,” he said. “We will continue to follow up on this matter and further evaluate the impact. The company will maintain close cooperation with suppliers and customers and continue to maintain active communication with the relevant department of the United States government working to resolve possible differences.”
When the Joe Biden administration takes office, it will likely continue the Commerce Department's emphasis on export controls and entity listings to stay ahead in technology competition with China, said Eric Sayers, an Asia-Pacific policy expert with the Center for a New American Security. Although both tools have been heavily used by the Trump administration, Biden might do more to convince allies to also impose those restrictions, especially as the U.S. fights to maintain commercial leadership in the semiconductor sector, Sayers said.
Microchip Technology Inc. halted all Huawei shipments in mid-September in compliance with further Commerce Department export restrictions on the Chinese tech giant imposed in August (see 2008170029), President-Chief Operating Officer Ganesh Moorthy said on a Nov. 5 investor call for fiscal Q2 ended Sept. 30. Huawei was the source of about 2% of Microchip’s Q2 revenue, down sequentially from Q1, according to Moorthy, who will succeed Steve Sanghi as CEO March 1, 2021, as Sanghi transitions to executive chairman. Microchip is working with Commerce “to apply for licenses for products and technologies that we believe have no impact” on U.S. national security, Moorthy said. “We do not know if or when such licenses may be granted,” so Microchip assumes no Huawei revenue in the fiscal third quarter ending Dec. 31, he said. Huawei's push to complete manufacturing of all products before the shipment ban took effect caused wide-scale supply-chain “constraints” during the September quarter, he said. The rush of its competitors to replace the business Huawei lost “further stressed the supply chain,” he said. The “ongoing shift” of semiconductor manufacturing out of China to avoid the Section 301 tariffs also pressured “the capacity in other Asian countries where we manufacture through our partners,” he said. The supply chain disruptions “are continuing into the December quarter,” he said.