October 2022 Newsletter

CTT Hails Export Control/YMTC Announcement, Calls For Vigilance And Continued Action. On October 7, the Bureau of Industry and Security (BIS) announced long-awaited export controls to restrict the People’s Republic of China’s (PRC’s) ability to purchase and manufacture certain high-end chips used in military applications. BIS also added YMTC to the Unverified List, a likely precursor to landing on the Entity List. China Tech Threat’s Dr. Roslyn Layton said the new controls “signal a new era of enforcement at BIS under the leadership of Alan Estevez, giving national security the consideration it lacked at BIS.” Dr. Layton pushed for vigilance and action, warning that dangerous Chinese military chipmaker Changxin Memory Technologies (CXMT) “is following the same playbook as Huawei and YMTC, using illicit means to gain market share and generate products which put Americans’ security at risk and enable Chinese government intrusion.” 

WTAS: October Wave Of American Policies On Chinese Technology Generates Strong Response From Policy Experts And Congress. The October 7 news out of BIS drew strong statements of bipartisan support, including: 

  • Senate Majority Leader Chuck Schumer remarked, “These restrictions on the transfer of advanced U.S. manufacturing technology are absolutely necessary, but there is still much more that needs to be done to stop the Chinese Communist Party from cheating and stealing its way to technological dominance… I continue to urge the Biden administration to act swiftly on other export control actions and to add YMTC to the Entity List to protect America’s technology supply chains and American consumers.”
  • Senator Tom Cotton called it “a good first step” in America’s economic confrontation with China but also demanded “the Commerce Dept. should blacklist more Chinese tech firms & stop slow-walking its legal requirement to identify and protect emerging, foundational technologies.”
  • Representative Michael McCaul, Ranking Member of the House Foreign Affairs Committee, stated, “These rules are a step in the right direction and a long time coming. If BIS implements and enforces these rules to the strictest of standards, then it will strike at the core of the CCP’s strategic objectives.”
  • Greg Allen of the Center for Strategic and International Studies (CSIS) described the moves as “an unprecedented degree of U.S. government intervention to not only preserve chokepoint control but also begin a new U.S. policy of actively strangling large segments of the Chinese technology industry—strangling with an intent to kill.”
  • Thomas Friedman of the New York Times said the new regulations are “a formidable new barrier when it comes to export controls that will block China from being able to buy the most advanced semiconductors from the West or the equipment to manufacture them on its own.”

Apple Halts Dangerous Deal With YMTC After BIS Export Control Action. Apple, which had a deal in the works to buy flash memory chips from YMTC, put a halt to the deal after the BIS export control announcement targeting Chinese chipmakers, including YMTC. The Nikkei report on the halted deal also showed how YMTC’s strategy of underpricing competitors through subsidies almost delivered a major win. A report issued earlier this year by CTT and the Coalition for a Prosperous America (CPA) on the Apple-YMTC deal revealed how YMTC’s underpricing strategy could lead to the loss of some 24,000 American jobs.

Florida Adopts Toughest Rules Yet To Protect People And Organizations From Chinese Government Intrusion. In late September, Florida Governor Ron DeSantis released an Executive Order to counter Chinese government intrusion in Florida’s computer networks. Specifically, the order prohibits Florida state and local government entities from procuring technology products and services from companies owned by, controlled by, or domiciled in China. Department of Management Services (DMS) Secretary Pedro Allende said the order “will make it harder for bad actors to gain a foothold on state infrastructure, will protect Floridians’ personal information and intellectual property, and will further secure key information systems and the critical infrastructure that our state and its citizens rely on each day.”

China Stealing American IP Means There Is No Free Trade. At the James Madison Institute’s annual Tech Summit in Miami, Dr. Roslyn Layton, Georgia Rep. Martin Momtahan, and Florida Rep. Randy Fine discussed Chinese government intrusion in US state legislatures. When the panelists took up the issue of free trade, Rep. Fine noted, “Trade means I buy something from you or I sell it to you. If you can just steal it, there is no free trade. And China today does not respect private property rights. They literally just go and steal our intellectual property. Without that, you don’t have it. The second thing is you have to price those externalities (national security), the cost of being reliant for the key ingredients that drive an economy from another country, we don’t price that either into our markets.”