China has seen a steady increase in demand for imports of semiconductors since January, China’s Commerce Ministry told reporters Sept. 10, according to an unofficial translation of a press conference transcript. A ministry spokesperson said China imported 15% more semiconductors from January to August compared with the same period last year, citing the COVID-19 pandemic and greater demand for computers, tablets and “medical electronics” due to distance working and learning. China has also been “actively stocking and increasing procurement efforts” of semiconductors as the U.S. has increased export restrictions on chips to Huawei (see 2008210045). The spokesperson said China’s increased demand has been “the main driving force for the growth of the global semiconductor market.”
The Bureau of Industry and Security added, revised and made technical changes to export controls in the Export Administration Regulations (EAR) to implement changes under the 2018 Wassenaar Arrangement (see 2007220015). Per a final rule released Sept. 10, BIS revised 28 Export Control Classification Numbers, altered license exceptions for four ECCNs, made technical changes to eight ECCNs and created one new ECCN for certain masks and reticles used for sensors. The rule follows a May 2019 rule that added controls to five technologies under the 2018 Wassenaar (see 1905220051).
China is growing increasingly confrontational on trade issues and may be more willing to respond to U.S. sanctions with restrictions of its own, experts told the U.S.-China Economic and Security Review Commission Sept. 9. As China mulls retaliation against the U.S., the Trump administration should focus on areas in which it has leverage over China by continuing to push for purchases under the phase one trade deal and restrict Chinese attempts to develop advanced technologies, the experts said.
The Trump administration is considering placing export controls on China’s top chipmaker, the latest move in a campaign of restrictions aimed at Chinese technology companies. The controls would target the Semiconductor Manufacturing International Corporation by placing it on the Commerce Department’s Entity List, Reuters said in a Sept. 4 report. The effort is being spearheaded by the Defense Department, the report said, which petitioned Commerce’s End User Committee last week to add SMIC to the Entity List.
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While industry welcomed the U.S. June decision to allow companies to more easily participate in standards-setting bodies in which Huawei is a member (see 2006160035), the administration should expand the rule to exempt all businesses on the Entity List, companies and trade groups said in comments last month. If the Bureau of Industry and Security does not expand the rule, companies will still be hampered at international standards bodies and could continue to cede technology leadership to China, they said.
The Bureau of Industry and Security released its long-awaited pre-rule for foundational technologies (see 2005190052), asking for industry feedback on the types of technologies BIS should target for potential export controls. The effort, which BIS is pursuing alongside restrictions for emerging technologies, seeks to pinpoint technologies that the agency said may warrant more strict controls.
The Bureau of Industry and Security added 60 entities to the Entity List, including 24 entities for helping the Chinese military build artificial islands in the South China Sea. BIS also designated entities in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland and the United Arab Emirates for a range of activities, including illegal exports to Iran, submitting false information to BIS, contributing to Russian biological weapons programs and more. BIS also revised five existing entries under Canada, Germany, Hong Kong, Iran and the UAE.
The Commerce Department’s recent restrictions against Huawei could “create substantial uncertainty and disruption” for the semiconductor supply chain, leading to lost sales and an eroding customer base for U.S.-origin goods, a semiconductor manufacturing industry group said Aug. 24. Semi asked Commerce to extend the deadline for the savings clause in its Aug. 17 rule and review licenses for non-5G items with “significant flexibility.”
After the first high-level review of the phase one trade deal, the principals talked about progress and ensuring the success of the U.S.-China trade agreement, but some believe the happy talk can't obscure that China and the U.S. are disentangling their mutual dependency in tech goods and services. “There is a re-alignment that is happening in real time,” Rideau Potomac Strategy Group President Eric Miller said in an Aug. 25 phone interview, the day after the call. U.S. and Chinese trade officials reemphasized their commitment to the phase one agreement during the Aug. 24 call, the Office of the U.S. Trade Representative said.