Cyber Threats

China Inches Closer to Legacy Chip Dominance – Will the U.S. Government Act Fast and Strong Enough? 

Posted on by China Tech Threat
A collection of recent headlines reinforces what China Tech Threat has been warning about for months – that the world is increasingly at risk of relying on China for its legacy semiconductor needs. The news tells the story of China’s march to obtain total self-sufficiency in semiconductors. This month the world saw Huawei unveil a phone with a 7nm chip made by SMIC – a technological breakthrough that caught many by surprise. CNBC reports that revenue from China’s top chip equipment makers surged in the first half of the year. And Arrian Ebrahmi notes in The Diplomat that China is boosting the country’s tax credit for investments in semiconductor research and development by 20% – further incentivizing Chinese firms to… Read More

4 Export Control Fallacies and Their Rebuttals

Posted on by China Tech Threat
By Steve Coonen Writing in the Wall Street Journal last week, professors Henry Farrell and Abraham Newman criticize American export control policies as having the potential to create more problems then they solve. Pointing the finger at America as a force for destabilization is divorced from the reality of the global export control landscape. China’s commitment to using American technologies to build up its military has necessitated export controls targeting the country’s chip sector. Here are four fallacies promoted in the article (in italics) and my rebuttals: Fallacy #1: The U.S. is to blame for export control-related global disruptions “A new tit-for-tat is emerging, and as China responds to the turn in American policy, there is a risk that the… Read More

CHIPS Act Anniversary: Must Play Offense and Defense

Posted on by China Tech Threat
Today, in honor of the first anniversary of the CHIPS Act, Commerce Secretary Gina Raimondo said, “The CHIPS for America program is a historic opportunity to solidify America’s leadership and protect national security.” Yes, the CHIPS Act is an important step in developing our own capabilities, but to be successful, we need to play offense and defense. Former Pentagon Chinese tech advisor Steve Coonen makes this point in the video below. Coonen cautions that we shouldn’t assist adversaries like China by supplying them with the semiconductor manufacturing equipment that they need to boost their own capabilities. For China, the ultimate aim is to dominate the global semiconductor market. We’ve seen this playbook before. China will subsidize and dominate – just… Read More

CHIPS Act Anniversary Arrives, Former National Security Advisor Weighs In

Posted on by China Tech Threat
This Wednesday (August 9), marks the one year anniversary of President Joe Biden signing the CHIPS Act into law. While it’s too early to judge if it’s ultimately a success or not, challenges persist, namely: U.S. export controls still ignore legacy Chinese chip manufacturers. Chinese chipmakers, including legacy leader SMIC, are growing stronger. Supply chain disruptions are front of mind. How do we ensure we have enough legacy chips for automotive, defense, and more if there’s another pandemic or global crisis? The U.S. military is still dependent on Chinese chips for mission-critical equipment. What do all these concerns share? Legacy chips. For these reasons and more, China Tech Threat recommended that when CHIPS Act funding allocations are made, that they… Read More

Why BIS End-Use Checks in China Are Useless

Posted on by China Tech Threat
By Steve Coonen Quoting an old Russian proverb, President Ronald Reagan once remarked, “Trust, but verify.” Reagan’s words may have been appropriate as the U.S. negotiated an arms control agreement with the USSR. But when it comes to inspecting how China is using American technologies, the U.S. government should adapt his words to go a step further: “Distrust and verify.” At their root, the Bureau of Industry and Security’s (BIS) end-use checks in China are practically useless. Under the terms of the U.S.-China end-use check agreement, it is impossible for U.S. export control officers (ECOs) to verify the ultimate destinations or end-uses of U.S. technology. With other countries, U.S. export control officers can conduct post-shipment verifications (PSV) with few restrictions… Read More

Scratching the Surface on Legacy Chips

Posted on by China Tech Threat
During Wednesday night’s Select Committee on the CCP hearing on “Ensuring U.S. Leadership in the Critical and Emerging Technologies of the 21st Century” Lindsay Gorman from The German Marshall Fund raised an important point. She said we must look at the CHIPS Act as a start of America’s recovery of strength in the semiconductor space, not an isolated initiative. Acknowledging that technology isn’t static, she said “we need a continuous iterative process where we evaluate to the best of our ability, what are the critical technologies of the future of the next 5, 10, 15 years? Where is China leading? Where are we leading?” Right now, America risks ceding the future of legacy semiconductors.  When it comes to semiconductors, the U.S. government… Read More

Reforming the Flawed Process of Listing Chinese Entities on A Case-By-Case Basis

Posted on by China Tech Threat
By Steve Coonen In 2019, the Department of Commerce’s Bureau of Industry and Security (BIS) wisely placed Huawei on the Entity List. This action was necessary for making sure the company could not obtain American components it needs to win the 5G race. But Huawei moved fast to protect its interests, quickly spinning off a company called Honor to maintain the flow of U.S. components required to produce 5G mobile devices. A state-owned company, Shenzhen Zhixin New Information Technology, subsequently purchased Honor in 2020, demonstrating the important role that the Chinese government plays in directing strategic technologies such as 5G. During my time serving at the Department of Defense (DOD), I personally pushed for the federal government to add Honor… Read More

Why BIS Should Put Components for Legacy Semiconductors Under Export Controls

Posted on by China Tech Threat
By Steve Coonen Last week, Chairman Mike Gallagher of the House Select Committee on the Chinese Communist Party spoke a plain truth: “Every foreign business that enters China takes on a sometimes silent, sometimes not-so-silent business partner: the Chinese Communist Party.” This reality continues to play out in the legacy semiconductor space. The more that American companies are allowed to sell components and manufacturing equipment for legacy chips to China, the more power the CCP will acquire to shape American national and economic security. When it comes to focusing on the danger of advanced or legacy Chinese chips, the U.S. government should reject a false choice of “either/or.” It must embrace a “both/and” concept and act to prevent a looming… Read More

Arizona’s Next Steps in Stopping PRC Infiltration

Posted on by China Tech Threat
Arizona is in the process of positioning itself to become a hub chip maker. Taiwan Semiconductor TSMC announced late last year their second Phoenix factory, making a $40B investment. With its position as a chip hub, the state is taking action to bolster defenses against PRC intrusion and has banned Chinese citizens from owning property in the state. With more than 7 million spent recently on banned China-owned technology, Arizona leaders should also pass legislation to ban the purchase of China-owned technology.  China Tech Threat recently discovered in a new report that the state of Arizona spent $7,315,675 on restricted Chinese Technology from Lenovo for agencies holding sensitive information. Our Arizona fact sheet shows the Department of Public Safety, the… Read More

House China Committee: American Businesses Risk Bolstering Chinese Military

Posted on by China Tech Threat
The House of Representatives Select Committee on the Chinese Communist Party (CCP) continues to expose how the CCP’s role in China’s economy harms American national security. At a hearing on July 13th, “Risky Business: Growing Peril for American Companies in China,” Chairman Mike Gallagher reinforced what American companies can expect when they do business in China: “Every foreign business that enters China takes on a sometimes silent, sometimes not-so-silent business partner: the Chinese Communist Party.”  Chief among the dangers for American businesses in China, besides massive intellectual property theft, is the fact that the CCP will weaponize American technology against the United States. As Gallagher stated, “China’s Military-Civil Fusion policy means any private company can be effectively turned into an arm of the… Read More