By On September 6th, Representative Mike Gallagher, chair of the House of Representatives committee on China, made a compelling argument for the U.S. Commerce Department to halt all technology exports to two prominent Chinese entities, Huawei and Semiconductor International Manufacturing Corp (SMIC). His call to action stems from the recent discovery of new chips within Huawei phones, which have raised concerns about potential violations of existing trade restrictions.
Representative Gallagher, a highly influential Republican lawmaker, leads a committee that has consistently pressed the Biden administration to adopt a more robust stance regarding the export of U.S. technology to China. His statement comes in the wake of Chinese tech giant Huawei’s release of the Mate 60 Pro smartphone, which features a chip believed to be the result of a significant technological advancement, potentially linked to Semiconductor International Manufacturing Corp (SMIC).
What amplifies these concerns is the assertion that this newly developed chip could not have been produced without the involvement of U.S. technology. As such, there are mounting suspicions that SMIC may have breached the Department of Commerce’s Foreign Direct Product Rule. Representative Gallagher’s call to halt all U.S. technology exports to both Huawei and SMIC carries the underlying message that any entity that defies U.S. law and poses a threat to national security will be unequivocally cut off from access to American technology.
This situation arises against the backdrop of Huawei’s placement on a trade blacklist in May 2019, citing national security concerns. Consequently, the move required its U.S. suppliers and others to obtain special licenses in order to ship goods to the company. Furthermore, SMIC found itself added to the so-called entity list in December 2020 due to apprehensions that it might divert advanced technology for military purposes.
The trade restrictions placed on Huawei and SMIC, including the Foreign Direct Product Rule, were designed to prevent any company worldwide from utilizing U.S.-sourced tools to manufacture chips intended for Huawei. However, an intriguing revelation is that suppliers to both Huawei and SMIC have managed to secure billions of dollars worth of licenses for the sale of U.S. technology to these companies, despite their presence on the trade blacklist. Remarkably, it has been reported that approximately 90% of these licenses were issued for sales to SMIC.
Representative Gallagher’s call for a complete halt to U.S. technology exports to Huawei and SMIC underscores the growing concerns surrounding the use of American technology in potentially compromising scenarios. It signals a firm stance in protecting national interests, technology security, and adherence to established trade restrictions. The intricate dynamics of the U.S.-China technology trade continue to evolve, bringing forth complex challenges and potential consequences for global technology ecosystems.
