The Department of Justice charged a California electronics company, its president and an employee with trying to illegally export chemicals to a Chinese company on the U.S. Entity List. President Tao Jiang, employee Bohr Winn-Shih and the company, Broad Tech System Inc., ordered the chemicals from a Rhode Island company before trying to ship the items to China Electronics Technology Group Corporation 55th Research Institute (aka NEDI) (see 2006030032), the Justice Department said July 20. The shipment would have violated the Export Control Reform Act.
The Taiwan Semiconductor Manufacturing Co. said it will stop chip shipments to Huawei due to the Bureau of Industry and Security's increased license restrictions, Nikkei Asian Review reported July 16. TSMC Chairman Mark Liu said the company has not taken any new orders from Huawei since BIS issued a rule May 15 increasing restrictions (see 2005150058), the report said. “Although the regulation just finished its public comment period, the BIS did not make a final ruling change. Under this circumstance, we do not plan to ship wafers [to Huawei] after Sept. 14,” Liu told investors at a conference, according to the report. TSMC did not comment. Liu did not say whether TSMC plans to apply for export licenses. The company recently announced plans to build a chip factory in Arizona (see 2005150033). U.S. lawmakers are concerned that could disadvantage U.S. chip companies if TSMC is awarded unfair subsidies (see 2005200030 and 2005270030).
The Commerce Department published its spring 2020 regulatory agenda for the Bureau of Industry and Security. The agenda includes a new mention of a rule to control “software” for the operation of “automated nucleic acid assemblers and synthesizers” capable of designing and building “functional genetic elements from digital sequence data.” BIS said the software can be used in the production of pathogens and toxins, with the potential for those to make their way into biological weapons if export controls on the software are lacking. The notice of proposed rulemaking, part of BIS’ effort to control emerging and foundational technologies (see 2005190052), will request industry comments about how the controls might affect “legitimate commercial or scientific applications.” BIS said it aims to issue the proposed rule this month.
Companies affected by the Bureau of Industry and Security's recent rule on military-related exports (see 2004270027) were frustrated by the lack of a comment period before the rule was finalized and BIS’s decision not to postpone the effective date, industry officials said in interviews. Some officials said they were disappointed the new requirements were not first issued as a proposed rule, adding that smaller businesses with fewer compliance department employees have struggled to adjust.
The U.S. government has been slow to incentivize research and development in the semiconductor industry, ceding ground to foreign governments that have been heavily investing in advanced technologies for “decades,” Semiconductor Industry Association CEO John Neuffer, said. He praised a recent push by Congress and the administration to provide more federal funding for semiconductor innovation (see 2006260013 and 2006110038) but said much more is needed.
A bipartisan group of senators unveiled a bill June 24 that would provide billions of dollars of federal funding for semiconductor research and manufacturing. The American Foundries Act, which is expected to be formally introduced June 29, according to a June 25 Reuters report, comes amid a strong bipartisan push (see 2006110038) for funding of U.S. technology innovation to counter China's influence in the sector.
It's unclear how a President Joe Biden would try to use policy to shape the global supply chain, but the Atlantic Council's Asia Security director said that since Biden prefers a multilateral approach, he “might be less likely” to impose tariffs or export controls. Miyeon Oh, who was speaking during an Atlantic Council webinar June 26, said he might try to get allies to coordinate an effort “to rebalance the global supply chain,” and he might seek to use American participation in the Trans-Pacific Partnership as a way to do so.
The Committee on Foreign Investment in the U.S. is closely monitoring Chinese investors who are trying to take advantage of struggling U.S. companies, trade lawyers said. CFIUS is also focusing on the semiconductor sector, where Chinese entities are hoping to evade recent U.S. rules that impose more strict license restrictions on sales of semiconductors and other technology to China and Huawei (see 2005150058), the lawyers said.
Export Compliance Daily is providing readers with some of the top stories for June 8-12 in case you missed them.
The Commerce Department's Bureau of Industry and Security announced a new set of export controls on certain cultivation chambers and chemicals (see 2005150048). The controls, agreed to by the Australia Group during a February meeting, restrict the sales of certain “rigid-walled, single-use” cultivation chambers and precursor chemicals, along with the “Middle East respiratory syndrome-related coronavirus,” or MERS. The final rule, which takes effect June 17, falls under BIS's effort to restrict sales of emerging technologies (see 2005190052), as mandated by the 2018 Export Control Reform Act, the agency said.