(Bloomberg) -- A key House Republican criticized the Biden administration’s latest attempt to curtail China’s chipmaking ambitions, saying US rules unveiled Monday leave loopholes that will let Chinese companies like Huawei Technologies Co. continue acquiring American technology.
Representative John Moolenaar, who chairs the chamber’s China Select Committee, expressed his concerns in a letter Wednesday to Commerce Secretary Gina Raimondo. He said parts of the new export controls give Chinese firms leeway to avoid sanctions, citing a provision that focuses on certain production facilities of firms like Semiconductor Manufacturing International Corp., Huawei’s chipmaking partner,applying different restrictions to different parts of the company.
Moolenaar praised other measures — such as restrictions on the export of high-bandwidth memory chips, which are essential to AI — but questioned why President Joe Biden’s administration took no action against ChangXin Memory Technologies Inc., which is trying to develop the same AI memory chip technology. Some Biden officials had pushed to add CXMT to the so-called entity list, Bloomberg News has reported, but the latest curbs ultimately stopped short of tougher measures previously considered.
Moolenaar asked Commerce officials to “preserve all documents and communications” relating to the new controls, so that President-elect Donald Trump’s team can “can properly identify any other loopholes” — signaling that Republicans could seek tougher measures when Trump returns to the White House in January.
The rules build on years of trade restrictions targeting Beijing’s semiconductor ambitions, including curbs on memory chips, semiconductor manufacturing equipment and leading-edge logic chips, which serve as the brains of devices. The Commerce Department’s Bureau of Industry and Security has also added 384 Chinese entities to a trade restriction list — the same number Trump did in his first term, according to a new report — including more than 100 Chinese chip tool companies added Monday. That designation bars those companies from buying American technology without a license.
But, Moolenaar said, the specific licensing requirements applied to certain Huawei suppliers “raise real questions about the culture at BIS and why BIS continues to facilitate shipments of US technology” to Chinese companies. For example, while the rules effectively deny all shipments to SMIC’s facility in Beijing, they allow “case-by-case” sales of specific items to SMIC in Shanghai, he said.
The rules also differ slightly for three Huawei-linked chipmakers: Qingdao Si’En, SwaySure and Shenzhen Pensun Technology Co., or PST. While sanctions against Qingdao Si’En apply a so-called presumption of denial policy for license applications, the latter two firms will undergo “case-by-case review” for technology not covered by broader US export controls.
“There is no national security justification for these loopholes,” Moolenaar wrote. A Commerce spokeperson said in a statement that the agency has “received the letter and will respond through the appropriate channels.”
Moolenaar earlier this year joined Representative Raja Krishnamoorthi, the top Democrat on the China panel, in pushing BIS to sanction some of the firms added Monday. The pair also directly lobbied the Japanese government to strengthen its controls on semiconductor equipment. Washington has been working with Tokyo and the Hague to coordinate restrictions that affect all of the top chip toolmakers: three American companies, plus Tokyo Electron Ltd. and ASML Holding NV.
Krishnamoorthi, for his part, was satisfied with the Biden administration’s approach. The targeted measures will not only hurt China’s “ability to produce advanced-node semiconductors that could be used in a range of military technologies, but also hinder their development of other advanced technologies, including artificial intelligence, that could be used for nefarious purposes,” he said in a Monday statement.
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