Congressional Report Exposes China’s Circumvention of Biden’s Semiconductor Sanctions
A recent congressional report has highlighted China’s ability to bypass President Joe Biden’s semiconductor sanctions, indicating that the measures currently in place are not sufficiently preventing China from gaining access to advanced semiconductor technology. The report, conducted by the U.S.-China Economic and Security Review Commission, reveals that Chinese firms have been cleverly procuring American chip manufacturing machinery to produce cutting-edge semiconductors used in artificial intelligence (AI). Despite the Biden administration’s efforts to impede China’s progress in the semiconductor sector, the report shows that China has successfully found ways to circumvent the sanctions through dubious claims, self-reliance, and collaboration with other countries.
According to the report, Chinese importers can often purchase the equipment needed for semiconductor production by claiming that it will be used on older production lines. With limited capacity for end-use inspections, it becomes challenging to verify whether the equipment is being used to produce more advanced chips. This loophole allows China to continue acquiring the necessary machinery, undermining the effectiveness of the current restrictions.
In response to China’s persistent attempts, President Biden introduced the 2022 CHIPS and Science Act, which aims to advance America’s semiconductor industry while countering China’s growing influence. The act includes provisions that prohibit the construction of certain semiconductor factories in China. However, as pointed out by semiconductor analyst Dylan Patel in September, the restrictions on U.S. semiconductor manufacturing equipment have proven ineffective, with companies selling almost every tool they offer to China.
The Biden administration implemented additional semiconductor sanctions on October 17, 2023, with the aim of further preventing China from acquiring advanced semiconductor technology. These rules, announced by the Department of Commerce, are designed to close existing loopholes and reduce the export of equipment required for producing advanced semiconductor chips.
Despite these efforts, the report reveals that between January and August 2023, China imported $3.2 billion worth of semiconductor manufacturing machines from the Netherlands, representing a significant increase of 96.1% compared to the same period in the previous year. China’s total imports of semiconductor equipment from all countries during the first eight months of 2023 amounted to $13.8 billion as Chinese companies accumulated stockpiles.
Commerce Secretary Gina Raimondo emphasized that the October restrictions build upon the Biden administration’s goal of preventing China from leveraging AI for military purposes. The report suggests that China is on track to more than double its imports of semiconductor equipment from 2019 levels, highlighting the country’s determination to increase its domestic chip production despite U.S. restrictions.
As a demonstration of its progress, Chinese technology company Huawei successfully released a high-tech smartphone powered by a domestically produced chip that is comparable to a U.S.-controlled chip. This achievement underscores China’s ability to develop advanced technology independently, regardless of the imposed limitations.
The report’s findings raise concerns about the effectiveness of the current semiconductor sanctions and highlight the challenges faced by the Biden administration in curbing China’s access to advanced semiconductor technology. As China continues to find ways to circumvent the restrictions, it becomes imperative for the United States to reassess its strategies and explore new approaches to safeguard its technological advantage.
The U.S.-China Economic and Security Review Commission, the White House, and the Commerce Department have yet to respond to the Daily Caller News Foundation’s request for comment on the report’s findings.
