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US tightens controls on advanced chip exports to China

Chinese are using items and capabilities to produce advanced military systems and commit human rights abuses, the Biden administration states

“These rules are a step in the right direction and a long time coming,” said Rep. Michael McCaul, House Foreign Affairs ranking member.
“These rules are a step in the right direction and a long time coming,” said Rep. Michael McCaul, House Foreign Affairs ranking member. (Tom Williams/CQ Roll Call file photo)

The Biden administration said Friday it will update export controls to limit China’s ability to purchase or manufacture certain high-end chips used in military application and will stop the transfer of advanced technology to 31 companies and institutions.

“The export controls announced in the two rules today restrict the PRC’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors,” the Bureau of Industry and Security said in a statement. “These items and capabilities are used by the PRC to produce advanced military systems including weapons of mass destruction; improve the speed and accuracy of its military decision making, planning, and logistics, as well as of its autonomous military systems; and commit human rights abuses.”

The bureau, a Commerce Department agency, said one new rule scheduled for publication next week in the Federal Register will take effect in three stages: on Friday, on Oct. 12, and on Oct. 21. The rule is meant to tighten export restrictions on selected advanced computing semiconductor chips, transactions for supercomputer end uses, and transactions involving certain companies and institutions on the Entity List, which specifies the requirements that each party must meet to retain licensing. The rule will also impose new controls on certain semiconductor manufacturing items and on transactions for certain advanced computing integrated circuit end uses.

“We are updating our policies today to make sure we’re addressing the challenges posed by the PRC while we continue our outreach and coordination with allies and partners,” Alan Estevez, Commerce undersecretary for industry and security, said in the statement.

Rep. Michael McCaul, House Foreign Affairs ranking member, welcomed the regulations.

“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,” McCaul, R-Texas, said in a statement. 

He said he would want more information about how the bureau goes about denying or approving export licenses. 

Rep. Val B. Demings, a member of Homeland Security and Intelligence committees, said tougher controls over the export of advanced computer chips are important to U.S. national security and economic development.

“Today’s new rules put American interests first, not corporate bottom lines, and will protect our national security and our economic edge in advanced computers and technology,” Demings, D-Fla., said in a statement. “I’m glad to see us stand up to China with this strong new wall between the CCP and American workers.”

The bureau also said it will add new licensing requirements for items bound for a semiconductor fabrication “facility” in China if it fabricates certain integrated circuit products. The agency warned that facilities owned by entities in China will face a “presumption of denial” in getting licenses for export while licensing for facilities owned by multinational corporations will be decided on a case-by-case basis.

The change will limit the ability of U.S. nationals to support the development or production of integrated circuits at certain semiconductor fabrication facilities in China without a license.

To minimize short-term effects on the semiconductor supply chain, the bureau also will create a temporary general license that would allow limited and specified manufacturing of items if they are for use outside China.

A second rule is a final regulation that took effect Friday and adds 31 companies and institutions to the agency’s list of entities with products destined for China whose end-use couldn’t be verified as complying with U.S. export administration regulations.  Nine entities confirmed as being in compliance will be removed from the unverified entity list.

The rule will clarify that a company or institution will be added to the unverified entity list if there is “a sustained lack of cooperation” by the government of a country where the check on an item’s end use is being done.

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