Responding to the failure of the Commerce Department to halt innovation at China's Semiconductor Manufacturing International Corporation Incorporated (SMIC), House Foreign Affairs Committee Chairman Michael McCaul (R-TX) and House Select Committee on the Chinese Communist Party Chairman Mike Gallagher (R-WI) have called on the adminstration to "rectify the failures by the Department of Commerce to enforce export controls on advanced semiconductors."
The letter to National Security Advisor Jake Sullivan appears to have been prompted by news reports that Commerce has been granting licenses for US firms to trade with SMIC, in spite of the firm's being restricted status. The Wall Street Journal reported the SMIC last year booked $1.5 billion, or one-fifth of it's revenue from contracts with US Chip designers like Qualcomm and others.
The lawmakers place responsability squarely on BIS, not the US firms conducting the trade:
"Export controls are not failing national security. Rather, it is the bureaucracy that writes policies, adjudicates licenses, and identifies technology that is failing export controls," the lawmakers wrote. Make no mistake, BIS’s lack of resolve has led to SMIC being more advanced than any current U.S.-based foundry."
Mr. McCaul called for BIS to take the following actions "immediately:"
Update and issue final Oct. 7, 2022 Rules: BIS must update these rules to cut off and limit workarounds for advanced semiconductor and tool exports to China.
Take immediate action against SMIC and Huawei: Following repeated violations of U.S. law and support for China’s military, 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.
Close the Cloud Computing Loophole: BIS must stop companies in China from circumventing the October 7 rules and entity listings by making the provision of cloud computing a licensable activity.
Enforce the 60-Day Rule for Moving Entities from the UVL to the Entity List: BIS must stop granting exemptions to its own rule that requires any entity on the Unverified List (UVL) that fails to perform an end-use check within 60 days to be automatically moved to the Entity List.
The full text of the letter can be found here
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