US Persons Controls Creating Chip Compliance Challenges, Former Official Says
LONDON -- A looming Bureau of Industry and Security rule that would expand the agency’s restrictions on U.S. persons' activities is “going to be a compliance challenge that I don't think we're ready for,” said Robert Monjay, a former BIS analyst and export control executive with Intel.
Monjay, speaking during a defense industry conference last week hosted by SAE Media, said the restrictions could add to the complications companies face trying to comply with current U.S. persons controls, including the expanded restrictions included as part of the Oct. 7 chip rule (see 2210310044) and State Department authorization requests for U.S. persons providing defense services abroad (see 2305230018). The new controls, still being drafted by BIS, would place restrictions on certain activities that support foreign military, security or intelligence services (see 2309120023 and 2303210037). One lawmaker described them as the largest expansion of presidential export control authority in years (see 2212210032 and 2301060034).
Monjay expects the rules to create a “defense-services like control on the activities of U.S. persons” for certain items, including the BIS 600 series defense and dual-use items. “It's not about how the semiconductor industry is going to survive this -- it's too important. It will find a way to survive,” he said. “But how can the rest of us work in a world where we've already gotten U.S. persons abroad [restrictions], and we need to bring that into the dual-use and 600 series frame, and think about where all of our U.S. people are across the globe?”
Monjay also said he’s concerned that export controls are hindering the U.S. and the EU from building chip facilities that make cutting edge semiconductors for use in defense technologies. U.S.-based semiconductor manufacturing company Global Foundaries, the top U.S. foundry, can make 14 nanometer chips, “which is the state of the art for 2008,” he said. For more advanced chips, companies have to "send your design to Taiwan and trust that it's protected there."
“We want our defense systems to be state of the art for 2023 and 2025 and 2030 and beyond, and that's not possible today,” Monjay said, noting “the reason for that is export controls,” including the International Traffic in Arms Regulations. These advanced fabs “cost about $20 billion to build and they have to run at peak efficiency continuously, and there is not the capability” to “effectively run an ITAR-compliant line, or candidly, a line compliant with any of the allied defense export export and security controls.”
He noted that TSMC and Samsung are building fabs in the U.S. and Europe, but those are a “generation behind what's current today, and by the time they're built, they’ll be two to three generations old.”
“And so if export controls do not take a serious look at how they can be modified to align with the operations of a modern foundry, we're going to be left with a defense industry that is trying to make do with Global Foundries and the other fabs that can produce great chips, but they aren't going to be competitive with what, candidly, China's going to be able to access from SMIC,” Monjay said. “And that is a very dangerous world.”