Economic Security

House China Committee Follows CTT’s Lead, Asks Hard Questions about Lenovo on Navy Bases

Posted on by China Tech Threat
On September 25, CTT released a memo exposing Lenovo’s presence as a sponsor of the Navy Exchange’s Gaming Hangar in Virginia Beach, VA during the Naval Air Station Oceana air show. Not only did Lenovo have a display booth inside a U.S. military facility, but Lenovo laptops were for sale through the Navy Exchange website, commonly used by military personnel for tax-free tech purchases. Given that Chinese-owned Lenovo was named a “known security risk” by the Pentagon’s own inspector general in 2019, and has ties to the Chinese military, we wanted answers how Lenovo gained a foothold on U.S. bases. (Read the whole memo here). We’re not the only ones asking hard questions. On October 5, Chairman Mike Gallagher of… Read More

SMIC’s Boom Shows Last Year’s Export Controls Haven’t Properly Limited the PRC’s Semiconductor Capabilities

Posted on by China Tech Threat
A year ago on October 7, the U.S. government seemed like it was getting tough when it issued  long-awaited export controls targeting the Chinese chip sector. But, one year in, it is now evident that these restrictions have not been adequate to stop China from making major chip advances or positioning itself to dominate the global semiconductor space. As Kate O’Keefe and Asa Fitch report in the Wall Street Journal, Chinese semiconductor maker SMIC is under some form of sanctions from the Department of Defense, the Department of Treasury, and the Department of Commerce. But it still took in $1.5 billion in 2022 from American semiconductor design companies. That revenue can be plowed back into SMIC’s research and development process… Read More

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

Actions Speak Louder than Words—So Where’s the Action from the Commerce Department?

Posted on by China Tech Threat
“Actions speak louder than words” was the refrain from Commerce Secretary Gina Raimondo on CBS’ Face the Nation last Sunday. Raimondo is referring to what she hopes to see from the Chinese government following her meetings in Beijing last week—not just promises of change, but concrete steps. The world shouldn’t hold its breath waiting for them. The Chinese Communist Party (CCP) can’t be trusted to uphold its promises—just ask the citizens of Hong Kong, who have seen their autonomy revoked in the last several years. Or maybe President Obama, to whom Xi Jinping made promises in 2015 that the CCP would stop militarizing the South China Sea. Or other nations in Asia, which are recently outraged after China released a… Read More

Congress’ Narrow Inquiry into U.S. Investment in China is not a Winning Strategy

Posted on by China Tech Threat
Writing in The Washington Times this week, Roslyn Layton examined the current inconsistencies in the United States’ regulatory approach towards curbing investment in Chinese military proxies. As we covered recently, President Biden issued an executive order that would require “U.S. firms to notify the federal government if they invest in some lower-end semiconductor production not already covered by export controls.”  In Congress, the U.S. House Select Committee on the Chinese Communist Party sent letters to financial firms BlackRock and MSCI this month, notifying their CEO’s that the Committee was investing the companies’ investments into certain Chinese companies. The letter states “Americans are now unwittingly funding PRC companies” that develop technologies for the People’s Liberation Army (PLA). Layton notes that this… Read More

Actions Speak Louder Than Words – Willful Blindness Series Recap

Posted on by China Tech Threat
With Labor Day around the corner, the unofficial end of summer is almost here. So, here’s our final plug for beach reading from CTT special advisor Steve Coonen. Coonen, who spent more than two decades in uniform as an Army artillery and foreign affairs officer and then nearly 14 years as an analyst at the Defense Technology and Security Administration (DTSA), wrote a nine-part summer series for CTT on America’s broken export control system.  The need to expose the administration’s willful blindless as it relates to export controls could not be more timely. Multiple outlets are reporting that one outcome of Commerce Secretary Gina Raimondo’s visit to China is an agreement between the U.S. and China to begin a series… Read More

Ca$h Over Country: Biden Administration Must Stop U.S. American Chipmaker

Posted on by China Tech Threat
With Secretary of Commerce Raimondo visiting China this weekend, Dr. Roslyn Layton penned an op-ed for the National Security Institute demanding the Biden Administration stop American semiconductor equipment manufacturers from profiting on the Chinese legacy chip sector. Rather than seek new economic cooperation with China, Dr. Layton argues the Secretary should be focused on preventing the sale of some of the world’s most sensitive tech equipment to legacy chipmakers. The problem is that three American companies – Applied Materials, KLA, and Lam Research – have made billions selling their chipmaking tools, including for legacy chips, to China. Dr. Layton notes: “As can be documented from public data, these three companies have grown their combined revenues from China by 102% between… Read More

CTT-CPA “Ca$h Over Country” Report Exposes How Three U.S. Toolmakers Are Boosting Dangerous Chinese Legacy Chipmakers

Posted on by China Tech Threat
A new report co-authored by Coalition for a Prosperous America Chief Economist Jeff Ferry and CTT co-founder Roslyn Layton reveals how American semiconductor equipment manufacturing companies are earning billions from Chinese legacy chip manufacturers. That bad choice is undermining American national and economic security: American semiconductor equipment manufacturers (SEMs) have succeeded in lobbying the U.S. government to permit them to sell some of the world’s most complex technology to Chinese government-aligned firms making legacy chips. As can be documented from public data, American SEMs Applied Materials, KLA, and Lam Research have grown their combined revenues from China by 103% between 2018 and 2022. .kb-image_8d3de2-89 .kb-image-has-overlay:after{opacity:0.3;} The Department of Commerce’s mission is to foster economic growth, and also to prevent adversaries… Read More

National Security is Economic Security

Posted on by China Tech Threat
Last week, the White House released the much anticipated Executive Order on outbound investment. As Politico notably reported in a preview story, President Biden’s action will require “U.S. firms to notify the federal government if they invest in some lower-end semiconductor production not already covered by export controls.” This is a step in the right direction and comes as the Administration is starting to wake up to the threat of a China-dominated legacy chip market. But more needs to be done. .kb-image9510_bbe45b-0f.kb-image-is-ratio-size, .kb-image9510_bbe45b-0f .kb-image-is-ratio-size{max-width:372px;width:100%;}.wp-block-kadence-column .kt-inside-inner-col .kb-image9510_bbe45b-0f.kb-image-is-ratio-size, .wp-block-kadence-column .kt-inside-inner-col .kb-image9510_bbe45b-0f .kb-image-is-ratio-size{align-self:unset;}.kb-image9510_bbe45b-0f figure{max-width:372px;}.kb-image9510_bbe45b-0f .image-is-svg, .kb-image9510_bbe45b-0f .image-is-svg img{width:100%;}.kb-image9510_bbe45b-0f .kb-image-has-overlay:after{opacity:0.3;} Financial Times columnist Rana Foroohar reacted to the Executive Order in a piece aptly titled, “The US now accepts national and economic security can’t… Read More