BIS Taking Too Long to Update, Strengthen China Chip Controls, Lawmaker Says

The Bureau of Industry and Security has had “more than enough time” to issue a final version of its October China chip export controls, which need to be “strengthened” and “vigorously enforced” to maintain American semiconductor leadership, Sen. Marco Rubio, R-Fla., said in a May 30 letter to Commerce Secretary Gina Raimondo. Rubio asked the agency when it plans to issue the final rule, what changes will be made, whether BIS had “delayed” finalizing the rule and more.

“Seven months have passed since the rule was issued, and nearly four months since the public comment period ended,” Rubio said. “That is more than enough time to incorporate feedback and strengthen the export controls in question so they achieve their stated goal.” Rubio noted that the only update to the rules since they were released last year was a January change that added Macau to the scope of the new license requirements (see 2301170035) -- “correcting an embarrassing oversight since Macau has been a Special Administrative Region of China since 1999.”

“These errors and delays do not provide confidence that BIS is serious about slowing down, much less stopping, China’s development in advanced technology and exploitation of current export controls,” Rubio said.

BIS’ fall 2022 regulatory agenda included plans to issue a final version of the interim final rule in March (see 2301050012). The agency also said it planned to release a rolling set of frequently asked questions to provide guidance on the rules, but those FAQs have taken longer than the agency originally planned (see 2301270026 and 2303220019).

While BIS looks to update the rule, companies are “hard at work to weaken and circumvent the rule’s export controls,” Rubio said. He specifically mentioned Nvidia, which has created “downgraded versions of its products for the Chinese market to skirt the rule,” referencing the U.S. chip company’s recent announcement that it’s offering new chips to Chinese customers that comply with the restrictions (see 2211080005 and 2305030016).

“While these lower-performance chips increase the time and expense for Chinese end users to perform tasks, they are still an improvement over Chinese-produced alternatives, allowing those end users to continue work in advanced fields that threaten our national security, such as Artificial Intelligence,” Rubio said. He added that Chinese firms are “bundling lower-performance chips and finding other workarounds to generate the computing power necessary for their work.”

He also pointed to the fact that certain South Korean companies, including Samsung, have “lobbied for and won special, one-year exemptions from the export controls,” asking whether BIS plans to give Korean chipmakers another one-year license. BIS Undersecretary Alan Estevez earlier this year said the agency is working with Korean companies on potentially extending certain aspects of the authorization, although details of those conversations remain unclear (see 2302240008).

Rubio noted that industry executives believe the export controls “are an annoyance and not a long-term problem for Chinese technology champions,” adding that Chinese chipmakers are finding ways “around the rule.” He said ChangXin Memory Technologies is “proceeding with a major expansion after confirming it can purchase American chipmaking equipment used for less sophisticated products.”

A Commerce spokesperson said May 30 the agency is "aware" of the letter and "will review and respond appropriately."