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The US Secretary of Commerce promises to take firm measures regarding the Huawei chip problem.

The US Secretary of Commerce promises to take firm measures regarding the Huawei chip problem.

On Monday, U.S. Commerce Secretary Gina Raimondo promised to take decisive action in light of a semiconductor chip production advancement in China that the House Foreign Affairs Committee deemed to likely involve the use of technology originating from the U.S. This would constitute a violation of export controls.

During an interview with Bloomberg News, Raimondo expressed concern over Huawei Technology’s advanced processor in the Mate Pro 60 smartphone, released in August. She also mentioned that the Commerce Department thoroughly investigates such matters.

The US has prohibited the sale of chips to Huawei, as it has been reported that the company used 7-nanometer chips from Chinese chipmaker Semiconductor Manufacturing International Corp. (SMIC) in their phones. This is a technology that China was not previously known to have the capability to produce.

Raimondo stated that the United States is investigating three new artificial intelligence accelerator chips being developed by California-based company Nvidia Corp. for China. She emphasized the importance of examining all specifications of these chips to ensure compliance with export controls.

The design of China-specific chips by Nvidia was investigated by the United States. These chips were found to slightly deviate from the new requirements set by the Commerce Department in October, which aimed to strengthen export controls on advanced AI chips intended for civilian use but could potentially have military purposes.

The Foreign Ministry of China issued a response on Tuesday to Raimondo’s remarks, stating that the United States is infringing upon the rights of Chinese companies and going against the principles of a market economy.

It is highly likely that technology originating from the US will be needed.

On December 7, the U.S. House Foreign Affairs Committee issued a report denouncing the Bureau of Industry and Security (BIS), the regulatory agency responsible for overseeing dual-use export controls, under the Commerce Department.

According to the report, the Chinese chip company SMIC is now manufacturing 7 nanometer chips, which are considered advanced technology in the semiconductor industry. Previously, only TSMC, Intel, and Samsung were able to develop these chips.

According to the 66-page report, SMIC’s recent achievement, which likely involved the use of U.S. technology and could be a violation of export controls, has not been addressed by BIS. It is time to acknowledge the reality that the unrestricted transfer of U.S. technology to China has greatly contributed to China’s rise as a leading scientific and technological powerhouse.

Excessive approvals alleged

The current U.S. export control system is being questioned due to the high rate of approval for controlled technology transfers and the lack of checks on end-use, according to Committee Chairman Michael McCaul of BIS.

The report by McCaul suggests that officials in charge of U.S. export control should assume that all Chinese entities will use technology for military or surveillance purposes. However, the high approval rates for licenses or exceptions for transferring dual-use technology to China indicate that officials at BIS are currently assuming that the items will only be used for their intended purposes.

Based on information from BIS’s website, determining the need for an export license from the Department of Commerce involves identifying whether the item being exported has an Export Control Classification Number (ECCN). The Commerce Control List (CCL) contains all ECCNs and is organized into ten main categories.

According to the committee’s report, almost all (98%) of the CCL items exported to China in 2020 did not require a license, while in 2021, approximately 90% of applications for exporting CCL items to China were approved by BIS.

According to the report, from 2016 to 2021, the two US export control officers in China completed an average of only 55 end-user checks per year on the approximately 4,000 active licenses in China. In other words, BIS probably verified less than 0.01% of all licenses, which is less than 1% of the total trade with China.

China is highly adept at circumventing regulations.

However, analysts note that China is adept at circumventing export controls set by the U.S. government.

An economist from UCLA Anderson Forecast, William Yu, explained in a phone interview with VOA Mandarin that China has the ability to obtain banned chips through a intermediary country. Yu gave an example of how some Middle Eastern countries have established companies to purchase high-level chips from the US and then transfer them back to China.

Thomas Duesterberg, a senior researcher at the Hudson Institute, stated in a telephone interview with VOA Mandarin that the BIS Department of Commerce has a challenging task.

The speaker stated that preventing technology from reaching a specific company in China is futile as the Chinese are skilled at establishing new companies or relocating existing ones under different names to avoid restrictions. They also emphasized the significant impact of technology in China due to its size.

According to Duesterberg, while BIS has achieved success in certain areas, such as developing advanced semiconductors and preventing Chinese acquisition of American technology companies, the report from the House Foreign Affairs Committee highlights that there are still many activities that policymakers want to regulate that are not being addressed.

Is the lack of resources or political determination the issue?

Despite its significant duty to maintain the United States’ lead in the growing science and technology rivalry with China, the Department of Commerce’s Bureau of Industry and Security (BIS) is relatively small with a workforce of only 300 individuals.

According to Breaking Defense, a New York-based online publication focused on global defense and politics, Secretary Raimondo expressed her disappointment at the annual Reagan National Defense Forum on December 2. She noted that the budget for BIS has remained the same over the past decade, despite the growing challenges and workload.

A joint statement was released by U.S. Representatives Elise Stefanik, Mike Gallagher, and McCaul in response to Raimondo’s request for more funding for the BIS. They, along with Gallagher who chairs the House Select Committee on the Chinese Communist Party, stated that simply providing more resources would not solve issues with export control.

Raimondo cautioned chip companies that the United States would increase restrictions to prevent advanced AI technology from being transferred to Beijing.

In a CNBC interview on December 2, she stated that the danger posed by China is significant and increasing. China is seeking access to our advanced semiconductors, which we cannot allow. Our decision to deny access is not limited to a single Chinese company, but rather extends to the entire country in order to protect our cutting-edge technology.