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Friday, July 19, 2024

GOP lawmakers call for heavier sanctions against China’s Huawei, SMIC

Ten Republican lawmakers are calling on the Commerce Department to impose heavier sanctions against China’s Huawei Technologies and Semiconductor Manufacturing International Corp., after the two companies displayed a domestically manufactured advanced smartphone chip, circumventing U.S. export controls.

House Foreign Affairs Committee Chairman Michael McCaul (R-Tex.) and nine other lawmakers signed the letter dated Thursday, which suggested seven measures to tighten sanctions against China’s chip industry and punish Huawei and SMIC for allegedly violating U.S. export controls. The letter was addressed to Alan Estevez, undersecretary of Commerce for Industry and Security.

Earlier this month, Huawei unveiled a smartphone running an advanced processor made by SMIC, timed to Commerce Secretary Gina Raimondo’s visit to Beijing. The phone launch made waves in U.S. policy circles, as an apparent sign that a four-year campaign in Washington had failed to prevent China’s state-supported tech champions from making the jump to the 5G era of chips.

Huawei’s new phone, the Mate 60 Pro, sent lawmakers scurrying to try to understand if SMIC had violated U.S. sanctions to make the chip.

The lawmakers’ letter enumerates how the Commerce Department could wield arcane export controls law to make it harder for China’s chip makers going forward.

The letter called on the Commerce Department to set up a China-facing sanctions authority under the International Emergency Economic Powers Act, which could impose “full blocking sanctions” on Huawei and SMIC. It called for all existing export licenses to Huawei and SMIC to be revoked, and for criminal charges to be pursued against the companies’ executives.

The Republican lawmakers’ letter addresses a long-standing complaint by some in Washington that the export controls had holes, allowing U.S. technology to still filter to China. Nazak Nikakhtar, who was a Commerce Department assistant secretary under the Trump administration, said that they had long known the export controls were far from airtight.

“Our export controls shouldn’t have gaps and holes in the way that they do,” she said. “This isn’t an indictment of the Biden administration or Trump administration or anybody in particular. This is across the board.”

The letter said that reports of the phone “suggest” a violation of U.S. export control regulations due to the ubiquity of U.S. technology in the global semiconductor supply chain. But proof that SMIC violated sanctions with the new chip remains elusive. Chip experts say while it would have been very difficult for the two companies to sidestep any and all U.S. technology in developing the chip, it is not impossible.

U.S. officials so far have not confirmed if they have evidence that either incriminates or exonerates SMIC. The Commerce Department said in a statement last week that they were still working to obtain more information on the “character and composition of the purported 7nm chip.”

“Let’s be clear: Export controls are just one tool in the U.S. government’s toolbox to address the national security threats presented by the PRC,” the statement said.

The Commerce Department, Huawei and SMIC did not immediately respond to requests for comment Thursday.

Doug Fuller, a chip researcher at the Copenhagen Business School, said he believed the chance that SMIC could make a 7-nanometer chip efficiently at scale without U.S. equipment was “basically zero,” but that it was possible for it to make them “very inefficiently in small volumes without American equipment.”

Chris Miller, a professor at Tufts University and author of the book “Chip War,” said “it would be pretty surprising if U.S. tools weren’t used. But I wouldn’t say I’m highly certain of that conclusion.”

The letter was also signed by House Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers (R-Wash.), House Armed Services Committee Chairman Mike Rogers (R-Ala.), House Select Committee on the Chinese Communist Party Chairman Mike Gallagher (R-Wis.), Ann Wagner (R-Mo.), Robert E. Latta (R-Ohio), Young Kim (R-Calif.), Gus Bilirakis (R-Fla.), Brian Mast (R-Fla.), and H. Morgan Griffith (R-Va.).

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