US Lawmakers Urge White House to Strengthen China Chip Regulations

L: Rep. Michael McCaul (R-Texas) addresses a press briefing in Stockholm on Sept. 1, 2023. (Henrik Montgomery /TT News Agency/AFP via Getty Images)/ R: Rep. Mike Gallagher (R-Wis.) speaks during a ceremony at the National Mall in Washington on July 27, 2023. (Anna Moneymaker/Getty Images)

Two senior House Republicans urged the Biden administration to strengthen the enforcement of export controls on sending advanced computing chips and the machinery required for their production to China.

In a letter dated Oct. 6 and addressed to national security adviser Jake Sullivan, Chairman Mike Gallagher (R-Wis.) of the House Select Committee on the Chinese Communist Party (CCP) and Chairman Michael McCaul (R-Texas) of the House Foreign Affairs Committee conveyed that existing U.S. export controls and related policies regarding Chinese tech companies are ineffective. They pointed out that these firms are able to exploit loopholes, resulting in significant advancements in chip technology that pose a national security risk.

The letter was issued in response to the recent launch of Huawei’s premier smartphone, the Mate 60 Pro. This device features an advanced 7-nanometer chip produced by the Chinese company Semiconductor Manufacturing International Corporation Incorporated (SMIC), despite existing sanctions. This chip, known as the Kirin 9000s, includes 5G connectivity capabilities.

Mr. Gallagher and Mr. McCaul said in the letter that the export control measures unveiled last October and “SMIC’s growing capabilities reveal a stagnant, obscured bureaucracy that does not understand China’s industrial policy, does not understand China’s military goals, and does not understand technology at all—and does not have the will to act.”

Huawei and SMIC are on a U.S. trade blacklist called the Entity List, which bans them from buying American technology.

The lawmakers called on the administration to take immediate action against these Chinese firms, saying, “SMIC and Huawei should be hit with full blocking sanctions, which would cut them off completely from U.S. technology and the U.S. financial system.”

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The letter said the current export controls need to be updated “to cut off and limit workarounds for advanced semiconductor and tool exports to China.”

Moreover, the lawmakers urged the administration to close the cloud computing loophole, which allows Chinese tech firms targeted by Washington to access cutting-edge U.S. chips via cloud providers. Chinese artificial intelligence firms reportedly use third-party cloud services and buy high-end American chips through intermediaries to bypass export control measures.

The Epoch Times has contacted the White House and the Commerce Department’s Bureau of Industry and Security for comment.

‘Disturbing’

The recent development forced the Commerce Department to launch an official investigation into Huawei’s made-in-China chip.

On Oct. 4, Commerce Secretary Gina Raimondo told lawmakers before a Senate Commerce Committee that Huawei’s chip breakthrough was “incredibly disturbing,” which is also quoted by Mr. Gallagher and Mr. McCaul in their letter.

The commerce chief said her department needs resources and tools to enforce the export controls.

“We need different tools. We need additional resources around enforcement,” Ms. Raimondo said. “We’re tough as we need to be, but we need more resources.”

She also told the House Science Committee last month that her department has found no evidence to indicate that Huawei or SMIC can produce 7-nanometer chips “at scale.”

“The only good news, if there is any, is we don’t have any evidence that they can manufacture 7-nanometer [chips] at scale,” she said. “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.”

In a separate move, the Commerce Department announced on Sept. 22 that it had finalized the rules under the CHIPS and Science Act to prevent China from benefiting from the $52 billion funds for U.S. semiconductor production, research, and workforce development.

Huawei briefly replaced Samsung to become the world’s biggest smartphone maker in 2020. Still, sanctions imposed by the Trump administration have cut off Huawei’s access to American technologies and hurt its smartphone business. Amid sanctions and pandemic-related challenges, Huawei posted a nearly 70 percent drop in profit in 2022.

Huawei and SMIC are also on the Defense Department’s blacklist, which targets companies tied to the Chinese military, the People’s Liberation Army (PLA).

Taiwan authorities announced last week that they would open an investigation into four local tech companies after Bloomberg reported that these firms are allegedly helping Huawei build its chip factories across southern China. The investigation will look into whether these firms violate Taiwan’s investment rules, including exports of sensitive technology and military-related products. 

Moreover, a teardown of Huawei’s latest smartphone revealed the presence of two memory chips from Korean semiconductor firm SK Hynix, the world’s second-largest memory chipmaker, prompting the company to launch a probe into the matter last month.

Reuters contributed to this report.