Huawei’s dilemma hides the “toothless” US export control of Chinese technology

Huawei’s dilemma hides the “toothless” US export control of Chinese technology



Semiconductor update

Any US government official who sees Huawei’s recent financial performance must feel that he is right.

Washington’s efforts to destroy Chinese technology groups seem to have worked: Huawei’s revenue plummeted, and its high-end smartphones roll out It was not applicable to 5G in late July, and it was forced to sell part of its business.According to Chairman Eric Xu, the company’s only goal in the next five years is Survive.

But policy experts warn that the United States cannot declare victory in the “technological war” with China. In fact, among the hundreds of Chinese technology companies sanctioned by the US Department of Commerce, Huawei is the only one fighting for survival.

“For now, the restrictions imposed are quite limited,” said Douglas Fuller, an associate professor at the City University of Hong Kong, who closely monitors the Chinese technology industry and the policies of Beijing and Washington. “Obviously, they have seriously affected Huawei. But for all other companies, not so much.”

That’s because Washington has used its most powerful weapon-banning the acquisition of semiconductors through American-made machines and the software tools needed to make semiconductors-only against Huawei.

Washington is facing a dilemma in trying to re-adjust its export controls: China has become the largest and fastest-growing market for US chip equipment makers and software manufacturers for chip design.

John Verwey, a trade and investment analyst specializing in microelectronics, debate It is the growth promoted by China that has provided funding for the innovation capabilities of American industries, thereby maintaining a leading position in the competition with China.

According to the Export Control Reform Act of 2018, the U.S. government must determine technologies that should be subject to additional export controls in addition to the existing military or dual-use technology register.

But as the government seeks to balance the national security risks posed by China’s acquisition of key chip technologies with the risk of the United States losing important markets, work on these lists has been delayed.

Instead, Washington is pursuing China with a more crude tool: the so-called Entity List, which is a register of legal persons deemed to engage in activities that run counter to the interests of US national security or foreign policy. U.S. companies need to apply for an export license to sell products to target companies, but they are not subject to a comprehensive ban.

“Control of specific technologies or end-uses can more effectively address broader national security risks,” said Emma Rafaelof, a policy analyst at the US-China Economic and Security Review Commission, an agency authorized by the US Congress. Wrote in a report. PaperShe added that the lengthy process of determining which technologies should be subject to additional export controls “allows the United States to export these technologies without restrictions during this period.”

The Ministry of Commerce has included more than 250 Chinese companies on the list, most of which have emerged in the past two years. But the department continued to issue export licenses to some of them, while others discovered loopholes.

An industry insider said: “For many of these Chinese companies, there are no consequences at all-you can say that this part of the US export control measures are useless.”

Hikvision, China Surveillance Technology Company Listed In 2019, in order to carry out suppression and surveillance in Xinjiang, Report Operating income in the first six months of this year increased by 40%.

China’s largest chip maker SMIC’s revenue increased 43% in the second quarter. Jefferies analysts wrote this month that although the company is prohibited from acquiring foreign equipment to use the newer technology to expand production capacity, its performance “shows that SMIC has been able to slowly acquire US equipment, albeit only at mature nodes.”

The possibility that Washington may impose Huawei-style sanctions on more Chinese companies hangs over the industry, as some officials in the Biden administration have discussed broader controls on exports of technology to China.

But in the long run, fears of greater damage to US technological leadership may continue to hinder this process. Fuller said: “What we will get from the Biden administration is a case by case, not a very broad ban.”


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