Manufacturing USA Institutes Can Aid Innovation in Export Controlled Tech, Industry Says

New Manufacturing USA Institutes can help the semiconductor industry reduce costs and accelerate innovation, particularly in emerging technology areas that could soon be subject to export controls, chip companies and industry representatives said in comments to the National Institute of Standards and Technology. They also said the Commerce Department should bar foreign entities from working with Manufacturing USA Institutes if they are subject to U.S. export restrictions or have operations in certain countries, including China.

The comments, released by NIST last month, were in response to the agency’s request for feedback on domestic semiconductor initiatives to strengthen the semiconductor and microelectronics innovation ecosystem (see 2211300005). NIST was specifically looking for comments on new Manufacturing USA Institutes, which were included in a provision in the 2021 National Defense Authorization Act aimed at bolstering a national network of linked manufacturing institutes to aid chip innovation.

Precision Neuroscience, a company working on brain computer-interface (BCI) technology, said it “commends” the effort, adding that Commerce should prioritize funding for companies working on BCI technology, especially because China is seeking to become a global leader in the technology.

Precision also warned that Commerce shouldn’t pursue a strategy of just export controls. Precision said it’s “imperative that the United States becomes the preeminent global leader in this technology” to “protect against harm by malign actors.” China is “already pursuing the technology so aggressively that it has been flagged as an area of serious concern by the U.S. Government,” the company said, pointing to the Bureau of Industry and Security's addition of the Chinese Academy of Military Medical Sciences to the Entity List in 2021 (see 2112160017). The academy was added for using “biotechnology processes” to try to create “brain-control weaponry.”

BIS last year solicited feedback for potential export restrictions on BCI technology, which it said militaries may use to improve “the capabilities of human soldiers” and in unmanned military operations (see 2110250011 and 2205050019). Tech companies told BIS that the controls, if not properly tailored, could stifle U.S. competitiveness, while university officials said restrictions would be premature and slow academic research of an emerging technology that could have important humanitarian uses, such as treating debilitating neurological disorders (see 2201100010).

“Of course, export controls -- while useful in slowing China’s technological acceleration -- do not address America’s needs to run faster,” Precision told NIST. The company said federal funding for BCI technology innovation is “essential” for U.S. products to “enter the marketplace and gain widespread adoption in order to leapfrog foreign competitors, especially malign actors that are weaponizing sensitive technologies for potential use against the United States and its allies.”

China already has spent “billions of dollars” on this technology, Precision said. “Permitting the United States to fall behind China in the race to develop and deploy brain-computer interface technology is not an option,” it said. The U.S. government “needs a viable strategy, and its strategy must include support for American companies that are advancing technologies to counter these very real threats.”

At least one other commenter advised Commerce against pursuing a strategy of unilateral export controls. America’s Frontier Fund, a nonprofit investment fund, said unilateral export controls on electronic design automation tools, without faster American innovation, would only hurt U.S. companies. “Chinese EDA suppliers are well positioned to fill the demand in the Chinese market that is currently served by U.S. suppliers,” AFF said, citing a report on export controls from Compass Lexecon, a consulting firm.

AFF said new Manufacturing USA Institutes would improve innovation by helping companies advance “from concept to silicon in weeks. Faster experimentation improves the likelihood a startup can overcome the valley of death.” It also said costs would be lowered: “Reducing the barriers to entry for semiconductor device innovators, startups, and businesses will be key to driving continued performance improvements.”

Kyocera, a Japanese electronics manufacturer with several manufacturing subsidiaries in the U.S., said it “strongly supports” Commerce's “efforts to invest in maintaining the U.S. leadership in semiconductor manufacturing.” It also said more U.S. funding will be “critical to the future success of new and emerging technologies.”

When selecting “technology focus areas” for Manufacturing USA Institutes, NIST should specifically target “critical technology defined under U.S. export laws,” Kyocera said. “That is, critical technology that already has been identified and controlled against exportation under U.S. export laws should be a key criterion for the scope. Such technologies are critical for U.S. interests.”

The company also pointed to gallium nitride (GaN) chip development and manufacturing technologies, which are subject to U.S. export controls and are “under active development in other countries through funding by foreign governments,” including China. Despite U.S. efforts to “prevent the dissemination of GaN laser diode technology,” China will develop that manufacturing capability on its own, Kyocera warned. “The Manufacturing USA semiconductor institute can protect the U.S. leadership in the GaN laser diode technology by, among other things, funding development activities that can improve existing GaN laser diode manufacturing techniques, which can accelerate the innovation of new product applications for GaN laser diodes.”

Kyocera also said Commerce should bar foreign entities from working with Manufacturing USA Institutes if they are “restricted under U.S. export laws, sanctions, or treaties.” SEMI, a trade group representing the microelectronics industry, said any foreign entities looking to participate with Manufacturing USA Institutes should have “sufficient [intellectual property] and data transfer protocols” and should not be allowed access to ‘Export Controlled information that requires specific controls.”

Lehigh University agreed, saying any foreign entities should follow “similar processes that universities are doing for engagement with foreign partners,” such as “restricted party screening” for export controls. The Semiconductor Research Corporation listed a range of conditions for foreign entities, saying they should be allowed to participate only if they don’t have “headquarters or majority ownership in nations of concern,” such as China, Iran, Russia and North Korea. They also must comply with all “existing and future international trade laws,” including the International Traffic in Arms Regulations and the Export Administration Regulations. “Publications by The Department of Commerce’s Bureau of Industry and Security should be used as a guide for determining admittance of companies with foreign headquarters.”