The U.S. is at a key moment with its China-focused export control policy. On October 7, the Commerce Department issued a slew of new regulations targeting China’s semiconductor industry, triggering a crucial 60-day period when Commerce Department will decide whether to add firms like YMTC and CXMT to the Entity List.
Meanwhile, a new Congress looks poised to exert pressure on Commerce to maintain a tough stance, with the potential new chairman of the House Foreign Affairs Committee, Michael McCaul, saying he will be “focused like a laser on export control issues.” And the New York Times wants to know if Apple will permanently step back from a dangerous Apple-YMTC deal, but Apple hasn’t yet commented.
On November 15, CTT’s Roslyn Layton convened experts Nazak Nikakhtar (Partner and National Security Co-Chair, Wiley; former Department of Commerce Lead on CFIUS) and Dustin Carmack (Research Fellow, Heritage Foundation) to discuss current trends.
Check out the entire conversation here. Here are some key points:
On the new congress’ desire to assess BIS’ effectiveness:
Carmack: “McCaul has been beating this drum for a few years…my understanding is…they’re going to launch a solid 90-day review of the Bureau of Industry and Security.”
Nikakhtar: “I think the trend is 100% heading in that direction…Chairman McCaul is going to do is really do look at the licensing policies, really do a thorough review of the regulations, and figure out if there’s licenses…Why is it but also instances or licenses not required? And why aren’t licenses required? And what are the loopholes in the rules, if any origins gaps that we need to fix? So I think they’re going to be aggressive on that think they’re going to take more effort to understand how the system works, to better detect these types of issues.”
On whether Apple will end its relationship with YMTC:
Carmack: “It’s wild to me that we’re still chatting about this that Apple has not…this is a company that was essentially a state backed company…and they are essentially going to be used as…a mechanism…to undercut the broader global memory chip sector. It’s going to…keep the fire on the administration to make sure that they actually get through with this.”
On a new Reuters report that BIS could soon put YMTC on the Entity List:
Nikakhtar: “Today, our end use checks are severely constrained by [the Chinese Ministry of Commerce]. I think [BIS Assistant Secretary] Matt Axelrod is absolutely correct. His approach is sound. If we can’t conduct adequate and use checks, we move you to the Entity List.”
Carmack: “I think there’s definitely interest on both sides of the aisle of tackling this. But the problem is, there’s a swirl around Washington of the cash flow that… people are relying on from China, and Chinese business here… trying to water down any kind of further restrictions or operations of American… semiconductor companies still wanting to do significant amounts of business in China.”
Undoubtedly more news will soon emerge as the Commerce Department gets closer to its deadline for transferring companies from the Unverified List to the Entity List. China Tech Threat will continue to track the latest developments and call for the movement of Chinese military-aligned companies like YMTC to the list.