US Shouldn't Rely on Export Controls to Protect Chip Industry, Former Defense Official Says

The U.S. shouldn’t rely on export controls on semiconductors to stay ahead of China because the strategy would likely “backfire,” a former Department of Defense official told Congress this week. Lisa Porter, the former deputy undersecretary of defense for research and engineering, said government intervention in supply chains can “distort the market in ways that are hard to predict” and could lead to unintended consequences for the microelectronics industry.

Porter specifically argued against the use of export controls to compete with China’s growing semiconductor industry, saying the restrictions would incentivize other countries to build their own semiconductor capabilities and limit the ability of U.S. companies to compete in global markets. Speaking during a July 20 House Intelligence subcommittee hearing, she added that the U.S. aerospace industry “provides a cautionary tale to any who would propose using export controls to enhance our global leadership posture in this or any technology industry,” including over advanced semiconductor equipment.

“While export controls usually do provide a short-term advantage, and timelines for others to develop indigenous capability may be long, there is no finish line,” said Porter, who resigned from the Defense Department last year. “Whatever choices we make, it is important that we take the long view, as our adversaries have been doing.”

She said the U.S. should prioritize innovation over trade restrictions. “We must not let our fears lead us into the trap of emulating the tactics of nations whose principles are contradictory to our own,” Porter said. “We must play to our strengths, which include our culture of innovation, our free market principles, our entrepreneurial spirit, our respect for intellectual property and the rule of law.” The Commerce Department is considering export controls over semiconductors and semiconductor equipment as part of its emerging and foundational technology control effort (see 2106140034), and Congress is taking similar steps (see 2010130042).

Will Hunt, a research analyst for Georgetown University’s Center for Security and Emerging Technology, also said the U.S. should emphasize innovation but added that export controls have a role to play within the U.S. microelectronics industry. Hunt specifically said the U.S. must improve its open-source intelligence and information sharing to help companies equip themselves with knowledge to counter Chinese attempts to acquire sensitive U.S. technologies. “Better open-source intelligence is also needed to ensure that U.S. export control policies remain effective and up to date,” he told the subcommittee.

David Isaacs, a Semiconductor Industry Association official, urged the House to pass and fund the CHIPS Act, which would provide incentives and funding for the semiconductor industry (see 2107160040). The Senate passed the measures as part of a broader bill last month (see 2106100028). “We’re not going to outspend China. We're not going to outspend these other countries. But we can outrun them. And that’s by doing what we do best, which is innovation and leadership,” Isaacs said. “We have Senate-passed legislation, and we are eagerly waiting for the House to act.”