The United States has seen no evidence that Chinese telecom manufacturer Huawei can make advanced smartphone chips “at scale,” Commerce Secretary Gina Raimondo told lawmakers on Sept. 19.
Huawei recently rolled out the Mate 60 Pro phone, which some analysts described as a “milestone” for China, spotlighting a seven-nanometer chip built domestically by China’s top chipmaker, Semiconductor Manufacturing International Corp. Beijing has hailed the new device as Huawei’s “triumphant return” four years after the United States moved to block the firm’s access to essential chipmaking technologies.
Ms. Raimondo acknowledged that she was “upset” upon hearing about China’s technological breakthrough during her trip to the country last month.
But the “good news” is that “we don’t have any evidence that they can manufacture seven-nanometer [chips] at scale,” she said at a congressional hearing.
“We’re trying to do use every single tool at our disposal—BIS, enforcement, patents—to deny the Chinese an ability to, you know, get intellectual property to advance their technology in ways that can hurt us,” Ms. Raimondo said in the testimony, using the acronym for the Bureau of Industry and Security, the agency under her department that regulates exports.
“Although I can’t talk about any investigations specifically, I promise you this: Every time we find credible evidence that any company has gone around our export controls, we do investigate,” she said.
Tech Insights, a semiconductor-focused research firm that did a teardown analysis of the flagship Huawei phone, also found two components from SK Hynix, the world’s second-largest memory chip producer, prompting the South Korean-based firm to open an investigation.
The business prospects of the Chinese tech giant, which in 2020 briefly surpassed Samsung as the world’s largest smartphone player, have been bruised since being added to a U.S. trade blacklist in 2019, a curb that was expanded the following year. Amid sanctions and pandemic-related challenges, Huawei in March reported a nearly 70 percent decline in profit in 2022.
Ms. Raimondo’s remarks on Huawei chips were met with an angry response from the regime in Beijing.
Chinese Foreign Ministry spokesperson Mao Ning on Sept. 20 characterized the U.S. tech curbs as an “abuse of the concept of national security to hobble Chinese companies” and said it'll steer China toward more self-reliance.
Ms. Raimondo gave her testimony at a House hearing to review the implementation of the CHIPS and Science Act a year after its passage. The bill directed tens of billions of dollars to developing semiconductors at home.
Ramping up domestic chip manufacturing is key to keeping the United States in the lead in the technological race, she said.
“I know that we are vulnerable; we buy all of those chips you’re talking about, the AI chips, the leading edge chips, all of that. None of them are made in America right now,” Ms. Raimondo said at one point, noting that she is aiming to “bring that manufacturing home ... as fast as we can.”
‘Out-Innovate’ China
U.S. investment in the field is “much lower” than China’s, Ms. Raimondo said, pointing to reports of Beijing setting aside as much as $145 billion in state subsidies for the semiconductor industry last year, with another package of about $40 billion to come.“We’re not a state-run economy, nor do we want to be one,” she said. “We’re not going to go toe-to-toe with them for public money; we’re going to out-innovate them and draw in private sector capital.”
“We’re going to continue to vigorously control U.S technology so they cannot get this technology for their military,” she said at the hearing.
On Sept. 22, the Commerce Department released the final national security guardrails of the CHIPS and Science Act. The rules classify semiconductors as “critical to national security” and restrict the expansion of advanced chip foundries in “foreign countries of concern” for 10 years after receiving CHIPS money.
Ms. Raimondo on Sept. 19 noted that her department has added more than 700 Chinese entities to the sanction list.
“Increasingly,” the commerce secretary said, “national security is about technology and keeping our edge over China, staying ahead of them.”
As long as the regime continues with its military-civil fusion strategy—leveraging civilian innovation for defense use, “we’re going to have to be tougher than ever to control that technology from getting into the hands of their military,” Ms. Raimondo said.
“It’s not that we want to hold back their economy per se, but we do want to hold back their military,” she said.
