Tomorrow, the House Select Committee on the Chinese Communist Party (CCP) will hold a hearing on “The Biden Administration’s PRC Strategy.” With Thea Rozman Kendler, Assistant Secretary of Commerce for Export Administration, set to appear before the Committee, it is virtually certain that lawmakers will probe the activities of the Bureau of Industry and Security (BIS).
Here are some questions we’d ask Kendler with a focus on legacy chips, a critical technology segment that China is moving fast to dominate:
- China is ramping up its ability to produce legacy-node chips. Technology analyst Dan Wang wrote in the New York Times this weekend, “…a world in which Chinese companies dominate the production of mature chips — driven directly by American policy — hardly looks like a victorious outcome for the United States.” Why isn’t the Commerce Department imposing export controls to stop the threat of a China-dominated legacy chip sector?
- You have said, “Industry is our primary line of defense…We can do whatever we can in government to promulgate clear and concise and effective rules, but it’s industry that’s responsible for compliance and putting those rules into effect.” Right now major chip companies are lobbying for the ability to continue to sell their products to China, and saying they need access to the Chinese market to advance their technology and U.S. leadership. Why should we trust industry to prioritize national security when their current actions suggest otherwise? How can we put the onus on government to both toughen the rules to stop the export of technologies that China can weaponize against the U.S. and incentivize industry to lead the charge?
- You have suggested that the U.S.-China competition over chips is “life or death.” In light of this statement, do you think BIS / the U.S. government is doing enough to create a U.S. advantage in the legacy chip space, and why isn’t BIS leveraging ALL the tools at its disposal to not only address known threats posed by the PRC but also to prevent U.S. technology from enabling the PLA?
- Secretary of Commerce Gina Raimondo has said that one goal of the CHIPS Act is to increase production of “current-generation and mature-node chips most critical to our economic and national security.” If we don’t use all the available tools to hinder the growth of China’s chip industry, which underpins its military ambitions and quest for global dominance, how will we be able to ensure long-term access to the chips we need most, and how would we avoid undercutting the disbursement of CHIPS Act funds for legacy semiconductor production?
The U.S. government has thus far focused on limiting China’s ability to produce the most advanced semiconductors and been largely dismissive of legacy chips. This is evident from policy based on node size. Additionally, BIS Director Alan Estevez told Congress earlier this year that “Chips are a ubiquitous commodity at the legacy level.” But when it comes to targeting China’s chip sector, the philosophy should be “both/and” not “either/or” and not driven by node size, where there’s a bias towards small. Legacy chips are critical to several sectors, including some of the U.S.’s most critical defense systems. We shouldn’t take a dismissive approach when American national security hangs in the balance.
With that, here’s a bonus question for Ely Ratner, Assistant Secretary of Defense for Indo-Pacific Security Affairs:
- According to the Department of Defense’s 2022 supply chain report, “DoD is still building visibility into the sub-tiers of the microelectronics supply chain; until there is greater visibility, it will be difficult to identify certain supply chain threats, vulnerabilities, and risks.” In the past year and a half since that February 2022 report came out, how has DoD worked to illuminate its microelectronics supply chain and mitigate risks, especially in terms of exposure to China?