Three Years Later – Mulvenon Looks Back on His SMIC Findings
In 2020, a report by cybersecurity expert James Mulvenon on Chinese chipmaker SMIC’s ties to the Chinese military undergirded the Commerce Department’s export controls targeting the company. Those controls (purportedly) cut off SMIC’s access to certain leading edge American technologies. But as Mulvenon and Joseph McReynolds write in a new report released in October 2023, “U.S. sanctions efforts to date have not been sufficient to deter SMIC; the firm has even opened a new Southern California office in recent months with public celebrations and fanfare.”
The title of the authors’ work says it all: “SMIC Races Over BIS Speed Bump to Fulfill China’s Strategic Ambitions: Continued Troubling Activities Even After 2020’s Entity List Designation.” In sum, Mulvenon and Reynolds write, “Between SMIC’s progress at 7nm production and China’s robust industrial practices continuing apace, there is little evidence that would suggest the current export control regime has successfully eased the threat that SMIC poses to U.S. national security interests.”
Perhaps most helpfully, Mulvenon and Reynolds give seven examples of SMIC’s ongoing relationship with China’s national defense industry. One of the most damning examples states:
“A number of researchers from both PLA universities and the broader Chinese defense industrial complex researchers are known to use SMIC processes and chips to conduct specialized research on radiation hardening for IC chip designs. Such research is primarily used for aerospace and military applications, and these efforts appear to be directly tailored to SMIC production specifications.”
American Toolmakers Will Continue to Fuel SMIC, Until BIS Expands Export Controls
The report is also noteworthy because it comes on the heels of Huawei’s debut of the Mate 60 Pro phone, a 5G-enabled device that uses 7nm SMIC chips. According to Mulvenon, the American tools legally exported to SMIC for the production of 28nm chips are “likely being rerouted to leading-edge production.”
Not that American toolmakers care about this defiance of export controls—Mulvenon reports, “According to the CEO of one major equipment manufacturer in a recent private conversation, equipment suppliers will continue to offer China the maximum range of equipment permitted by law in keeping with their corporate interests.” (CTT’s Roslyn Layton and Coalition for a Prosperous America’s Jeff Ferry expose the toolmakers’ ambitions in their recent paper Ca$h Over Country.)
Similarly, this greedy and unpatriotic corporate strategy is consistent with what CTT advisor Steve Coonen has written: “A willful blindness among various actors participating in the regulation of technology sales to Chinese entities characterizes our export control system. This negligence undermines American national security and dishonors our forces’ willingness to sacrifice for our country.”
The Wall Street Journal’s Kate O’Keefe also picked up on Mulvenon’s new work recently, inserting this line from the report in her October 5 story about SMIC’s thriving business with the U.S. in spite of a blacklisting: “It is not an exaggeration to predict that allowing SMIC to remain highly profitable and heavily engaged in cutting-edge R&D over the coming years could materially alter the odds that the U.S. prevails in a hypothetical military conflict with China.”
BIS to Soon Issue New Updated Export Controls: Will They Finally Close the SMIC Loophole?
As the Biden Administration gets closer to issuing the final updated version of its original October 7, 2022 export control actions targeting China, it must adjust the coming package to close loopholes allowing SMIC to prosper using American tech.
Congress is watching closely. In the past month, Chairmen Michael McCaul and Mike Gallagher have “urged [the] White House to rectify Commerce’s export control failures,” writing last week that “BIS has been enabling SMIC’s rise for more than a decade.”
As Mulvenon’s report summarizes, “Even in the absence of military conflict, further restrictions on SMIC would be a proportionate and proper response to the PRC government’s artificial support of SMIC as a national champion, and the United States’ abiding interest in avoiding reliance on a hostile nation in a core sphere of technology development.”
Will BIS finally act?
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