'No Timetable' to Finalize China Chip Controls, Raimondo Says

Commerce Secretary Gina Raimondo this week declined to say when she expects the Bureau of Industry and Security to finalize its Oct. 7 China chip controls (see 2210070049, saying it’s more important to her that the agency takes its time and gets the updated restrictions “right.” She also said she doesn’t see Chips Act funding and restrictions on American chips sales to China as contradictory and denied reports that the administration has delayed new export controls against China in an effort to limit damage to its relationship with Beijing.

Raimondo, speaking during a July 26 event hosted by the American Enterprise Institute, said there’s “no update, there’s no timetable” for when BIS will publish a final version of the interim final rule last year that introduced new export controls on chip-related exports and activities involving China. “As I'm telling the team, you got to get it right,” she said. “So the timetable is as fast as we can, and make sure it's correct.

She added that the agency is “right now engaging heavily with industry to try to figure it out,” calling it a “hard” exercise. “I’m not asking for sympathy -- I'm just saying this is very hard,” Raimondo said. The agency is trying to be “incredibly targeted” and doesn’t “want to control anything that you don't have to control because it denies U.S. companies revenue that they can plow into” research and development. But “on the other hand,” she said, “you don’t want to let anything through the gates that you need to control.”

As part of the final rule, the Biden administration is reportedly considering imposing export controls on a broader set of artificial intelligence-related chips (see 2306290048 and 2210070049). Raimondo declined to say what the final rule will include, but said “AI is a huge piece of this.” The U.S. is “ahead of the world in AI. That's a great thing and we want to stay there.”

“How do we do it?” she said. By “getting into the weeds of the technology, engaging with industry, engaging with technical experts in academia and elsewhere to figure out where do we draw the line to protect American and American national security.”

She said she’s meeting with chip and technology companies “to get to the right place so we don't damage American business.” But she also stressed that the administration is willing to limit sales to China of a particular technology, especially involving AI, to protect national security.

“China has been clear that if they are able to get this technology, including certain advanced AI chips, they could use it in their military against us,” Raimondo said. “It may be that American companies can make money doing that. We're not going to allow that.” She said this will “deny some revenue to American companies, but we think it’s worth it.”

Raimondo also said she doesn’t “see an inconsistency” between the administration’s priorities under its Chips Act funding program and its semiconductor export controls. Commerce earlier this year proposed restrictions on certain uses of American chips funding to align those limits with existing export controls and to prevent that money from being used in certain ways in China (see 2304050050).

“It's not good for America or any American company If we allow our most sophisticated technology, in some cases that only we make, to get into the hands of the [People’s Republic of China] and their military,” Raimondo said. But she also said she doesn’t want that line to be “so broad” that “you deny American companies revenue and China can get the product elsewhere.”

“So what we're trying to do is be narrow, narrowly defined, work with our allies around these choke-point technologies,” Raimondo said.

She was also asked by an audience member why the administration has reportedly held back sanctions and export controls on China. Lawmakers have accused the administration of delaying those measures, including new controls against Huawei, in an effort to appease Beijing, but officials have said those claims aren’t true (see 2307190057 and 2307200061).

“I don't think there's been a delay,” Raimondo said. “I know there's been lots of rumors and sort of rumors reported on. We're just doing our job. There was nothing to be announced. And if we decide to make any changes, we'll do that in due course.”