export controls

New Report Warns of Chinese Control of Legacy Chips

Posted on by China Tech Threat
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

Posted on by China Tech Threat
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

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

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

Raimondo Email Hacked, Huawei-SMIC Teaming Up – China’s Not Slowing Down

Posted on by China Tech Threat
Yesterday, news broke that Chinese cyberspies hacked into emails at the U.S. Commerce and State Departments. Commerce Secretary Gina Raimondo was among those affected. According to The Washington Post, officials said the hackers were “looking for information useful to the Chinese government” and “had access to the email accounts for about a month before the issue was discovered and access cut off.” This brazen intrusion isn’t surprising, since Commerce has gotten tougher on China with export controls to protect our national security, most notably through its October 2022 action to restrict China’s advanced semiconductor capabilities. Ironically, The New York Times Magazine published a lengthy piece the same day the hacker story broke called “‘An Act of War’: Inside America’s Silicon Blockage Against China.” The article poses an important… Read More

Skirting U.S. Export Controls, China Stockpiles U.S. Semiconductor Toolmaking Equipment

Posted on by China Tech Threat
New Financial Reports Reflect Huge Profits from Selling to Chinese Chipmakers with Connections to the Chinese Military The White House’s June 2021 supply chains report noted that the People’s Republic of China (PRC) relies on the U.S. and a couple of other companies/countries to purchase the tools that allow them to manufacture their own microchips. More specifically, three U.S. companies lead the global toolmaking industry: Lam Research, KLA, and Applied Materials. According to White House calculations, the semiconductor equipment manufacturing industry is dominated by the US (42 percent market share), Japan (31 precent) and the Netherlands (19 percent), concluding that “although there is a Chinese company producing every category of semiconductor manufacturing equipment, Chinese companies “do not have a notable… Read More

Biden Administration on China and Export Controls: Economic Cold War or Reflection of Reality?

Posted on by China Tech Threat
As China Tech Threat readers very well know, the Biden administration issued long-awaited export controls in October designed to restrict the People’s Republic of China’s (PRC) ability to purchase or manufacture high-end chips. Some have criticized the move as “a declaration of an economic cold war.” Daleep Singh, a former Biden administration Deputy National Security Adviser, is weighing in. Singh recently wrote in The Economist that “America is simply adapting to intensified competition for pre-eminence in the foundational technologies of our time.” We agree. From both national security and economic standpoints, Chinese dominance and superiority in the semiconductor space is dangerous, and the Biden administration has taken actions to prevent that from happening. Singh also calls for the Biden administration… Read More

BIS is on the Clock: Experts Assess Export Controls, Effectiveness with Regard to China

Posted on by China Tech Threat
We have 7 DAYS left in the BIS Countdown that started on October 7 when the Bureau issued long-awaited export controls targeting Chinese chipmakers. Will YMTC, a national champion chipmaker, and others on the Unverified List (UVL) allow for and pass end-use checks, or will they get put on the Entity List? That’s one of our big questions. Earlier this month, Roslyn Layton hosted a virtual event to dive into the new export controls and related issues with Nazak Nikakhtar (Partner and National Security Co-Chair, Wiley; former Department of Commerce Lead on CFIUS) and Dustin Carmack (Research Fellow, Heritage Foundation). They discussed the impact of the controls on China’s semiconductor capabilities, the Apple-YMTC relationship, and how the new Congress should… Read More

More U.S. Pressure Coming on YMTC – Will American Allies Join In?

Posted on by China Tech Threat
YMTC is firmly in the crosshairs of both the executive and legislative branches of the U.S. government. Will the desire to stop one of the world’s most dangerous companies go international? Ever since the Biden Administration unleashed a new round of export controls targeting the Chinese semiconductor chip industry on October 7, Chinese firms have been buckling under the weight of the new restrictions. For example, the South China Morning Post reports that “China’s chip output in October reached 22.5 billion units, down 26.7 per cent from a year ago and the largest single-month decrease on record.” More actions from the executive branch seem likely. This week, Bureau of Industry and Security Assistant Secretary Matthew Axelrod is quoted by Reuters… Read More