Caught Red Handed: Applied Materials Allegedly Illegally Exporting Tech to China

For years China Tech Threat has warned that U.S. export controls have been insufficient to stop the transfer of American technology to the Chinese military. In our August 2023 report, Cash Over County, we explained how American semiconductor equipment manufacturers Applied Materials, KLA, and Lam Research grew their combined revenues from China by 103% between 2018 and 2022—strengthening the Chinese military and intelligence apparatuses in the process. Apparently, the greed infecting at least one of these companies is worse than we thought. Reuters reports that the Justice Department is investigating Applied Materials for allegedly selling hundreds of millions of dollars’ worth of equipment to China in violation of U.S. export controls. The alleged infractions took place in 2021 and 2022,… Read More

As Biden and Xi Meet, Chinese Tech Threats Continue to Grow

President Biden and Chinese President Xi Jinping will meet in San Francisco today. In the lead-up to the meeting, Treasury Secretary Janet Yellen said that the U.S. seeks “a pragmatic economic strategy: one that protects our vital national security interests while seeking a stable and healthy economic relationship.” It sounds wonderful. But the most pragmatic strategy is one that recognizes the extent to which China is threatening the U.S. through technology. If left unchecked, multiple ongoing Chinese efforts in the tech arena will continue to damage both American national security and prosperity. Begin with semiconductors. China has responded to the U.S. restrictions imposed on advanced chips (14nm and lower in node size) in October 2022 by subsidizing the production of… Read More

YMTC’s Chip Breakthrough Shows Weakness of U.S. Export Controls

Last year, the U.S. imposed export controls designed to curtail the flow of American chipmaking technology to Chinese semiconductor firms. Soon after, one of China’s top chipmakers, YMTC, was added to the Entity List. Both actions were long awaited, but were they too little, too late? The evidence is mounting and suggests the federal government has much work ahead of it to properly curtail the Chinese semiconductor industry while also bolstering American production. The latest example comes from TechInsights, which recently reported that it discovered “the world’s most advanced 3D NAND memory chip in a consumer device.” Shockingly, its manufacturer is YMTC—a company with proven ties to the Chinese military. The fact that YMTC can continue to make world-leading chips… Read More

New Report Warns of Chinese Control of Legacy Chips

The Silverado Policy Accelerator is out with an excellent new report on how the Chinese government is using subsidies to grow China’s semiconductor industry, put Western firms out of business, and make the world dependent on Chinese legacy (or “foundational”) chips. Foundational Fabs: China’s Use of Non-Market Policies to Expand Its Role in the Semiconductor Supply Chain hits on many of the same notes which China Tech Threat’s Every Chip Matters did earlier this year. As Foundational Fabs’ executive summary states: The Chinese industry is already impacting the global industry by putting downward pressure on prices for some products and capturing market share. This is critical as foundational semiconductors account for three-quarters of global foundry capacity, are essential to applications… Read More

Lam Research’s China Revenues Show that U.S. Export Controls Aren’t Working; Blanket Policy Denials Are Needed

By Steve Coonen A top U.S. semiconductor manufacturing equipment manufacturer, Lam Research, released its most recent quarterly results last week, and the numbers clearly indicate that U.S. export controls are not working. As Nikkei Asia reports: Despite the semiconductor-related export curbs first announced in October 2022 that barred American companies from shipping advanced chip equipment to China without a license, the country remains Lam’s largest revenue contributor, contributing 48% of the total in the three-month period, up from 30% a year ago and 26% in the previous quarter. That’s right, Lam’s China revenues are rising as a percentage of company revenue, not falling. Lam’s leadership doesn’t foresee its China business dropping off, either. Referring to new export controls released last… Read More

Experts React to Disappointing New Round of Export Controls at “Cash Over Country” Event

A year ago, BIS issued a landmark set of export controls designed to hinder China’s ability to make advanced semiconductors (and with good reason, since China’s major semiconductor companies are tied to the Chinese military). While encouraging at the outset, they’ve ultimately proved to be inadequate because of loopholes and a too-narrow focus on advanced chips. When reporting first trickled in that BIS was going to add additional provisions to the October 7 rules, optimism was brewing that BIS may expand them to cover legacy chips. After all, addressing China’s drive to dominate the legacy chip sector would be a logical step for protecting American national and economic security. That optimism was rooted in comments from Commerce Secretary Gina Raimondo,… Read More

As BIS Prepares to Issue Updated Export Controls, A New Report from James Mulvenon Highlights SMIC’s Ties to Chinese Military

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… Read More

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

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

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? 

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