China on “multiple occasions” has protested the Trump administration’s “unreasonable oppression of Chinese enterprises” on false national security grounds, said a Foreign Affairs Ministry spokesperson Monday when asked about reports that DOD is seeking to impose export restrictions on Semiconductor Manufacturing International Corp. (SMIC), China’s largest chipmaker. The administration “for some time” has been “abusing” its authority “to impose all sorts of restrictive measures on Chinese companies without producing any solid evidence” of wrongdoing, he said. “This is stark bullying. China firmly opposes that.” SMIC has been “fully compliant with all rules and laws” throughout its “long-term strategic partnerships with multiple U.S.-based semiconductor equipment suppliers,” said the company Saturday. SMIC “manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses,” it said. “We have no relationship with the Chinese military.” Any statements to the contrary are “false accusations,” it said. It’s open to “sincere and transparent” talks with the administration to resolve “potential misunderstandings,” it said. DOD didn’t comment Tuesday.

The Office of the U.S. Trade Representative notified Sonos it got extension through Dec. 31 of the exclusion from the List 4A Section 301 tariffs on speaker imports from China, said the company in a Thursday SEC filing. The exclusion extension eliminates the 7.5% tariffs until year-end. Sonos sources the speakers under the Harmonized Tariff Schedule's 8517.62.0090 subheading for a wide swath of Bluetooth goods, one of 87 categories granted USTR extensions Aug. 31 (see 2008310033). Sonos, whose exclusion was granted in March (see 2005110034), has begun the process of seeking refunds for the $30 million in tariffs paid through July, said Chief Financial Officer Brittany last month (see 2008060030). The company is continuing plans to diversify its supply chain into Malaysia, Bagley said on the August call. Sonos turned to Malaysia to reduce exposure to the tariffs on Chinese-sourced wireless mesh networking audio components. The company planned to have “significant” U.S.-bound production from Malaysia ramped up by Dec. 31, but due to COVID-19-related government restrictions on manufacturing in Malaysia, reaching scale will take until mid-2021, Bagley said.

President Donald Trump's administration “is committed to bold, decisive action" against China that protects U.S. national and economic security interests, said Commerce Secretary Wilbur Ross during a Wednesday Commerce Department Bureau of Industry and Security virtual event. He cited BIS' additional export restrictions on Huawei (see 2008170043) and Trump’s Aug. 6 executive order banning U.S. transactions with the parent companies of TikTok and WeChat. TikTok parent ByteDance is suing the administration to block the EO (see 2008240047). The new restrictions on Huawei “directly impact” the company’s “ability to work through third parties to harness advanced U.S. technology to meet the Communist Party’s objectives, and they will level the playing field by ensuring that both U.S. and foreign companies must receive the Commerce Department license to sell covered products to Huawei, Ross said. He said the TikTok/WeChat ban is necessary because the app’s parent companies “are in China, and these mobile apps collect personal and proprietary information that constitutes possible threats to our national security, foreign policy and economy.” Some experts predict Trump’s re-election campaign will use the Huawei restrictions to depict him as tough on China (see 2008270051). Former National Security Adviser John Bolton, in The Room Where It Happened: A White House Memoir, said Trump tried to use Huawei as leverage in the U.S.-China trade talks.

COVID-19 and recent Chinese government actions “coalesced long-standing Western concerns about China, focusing on self-sufficiency, national security, trade deficits, business ethics, and human rights,” reported the Information Technology and Innovation Foundation Monday. Beijing likely will be “the biggest business disruptor of the 2020s, but the discussion about how to respond has yet to take shape,” said ITIF. “A strategic framework should rebalance the global supply chains, bolster competitiveness, adjust to China’s market size, and solidify the West’s appeal.” Though U.S.-China trade tensions could “defuse,” relations between the countries “increasingly look like a win-lose economic struggle that will test which nation is stronger and which is likely to prevail in specific industries,” it said. It sees the 2020s as likely the “decisive decade.”

The Office of the U.S. Trade Representative extended List 4 Section 301 tariff exclusions to Dec. 31 on 87 Harmonized Tariff Schedule categories of Chinese imports, including LCD TV main board assemblies (HTS 8529.90.1300) and modules (HTS 9013.80.9000) that Element Electronics sources to assemble finished sets in South Carolina for sale through Walmart and other big-box retailers (see 2006090056). The exclusions were to expire Tuesday. Also extended were exclusions on smartwatches, fitness trackers and Bluetooth tracking devices (HTS 8517.62.0090), plus wireless audio receivers for smart speakers (HTS 8518.22.0000). USTR will let expire more than half the 200 exclusions it granted.

President Donald Trump’s warning that he will remove all U.S. business from China in a second term got a sharp rebuke Friday from the Chinese Foreign Affairs Ministry. To threaten the “relocation of production capacity” as Trump did is “political manipulation that puts partisan and personal interests above U.S. national interests,” said a ministry spokesperson. “The perverse practice of going against the voluntary will of the vast business community, forcibly scrapping existing cooperation between countries, and coercing companies with regard to their normal investment and operation runs counter to the law of market economy and will eventually lead to self-harm.” China will "own our country” if Democratic presidential candidate Joe Biden is elected, Trump told the Republican National Convention Thursday evening.

It’s best for a company like TikTok not to be owned by Chinese entities, Rep. Will Hurd, R-Texas, told C-Span's The Communicators, scheduled to be telecast this weekend. Removing TikTok’s Chinese ownership (see 2008240047) would “lower my blood pressure a little bit,” but the company’s past practices need scrutiny, he said. He noted discrepancies between how American companies are treated in China and vice versa: If American companies can’t fully operate in China, Chinese companies shouldn’t be able to operate fully in the U.S. The two nations should have reciprocity and if they don't, there should be consequences, he argued. Artificial intelligence is the future of cybersecurity, he said. The U.S. won’t win that war without public and private partnerships, he said, citing tenuous relations on U.S. government contracts with major U.S. tech companies, noting Google’s exit from DOD's Project Maven over employee concerns. Hurd said developing a national artificial intelligence strategy is a priority as he prepares to leave Congress.

Chipmaker Semtech is forecasting revenue of $145 million-$155 million for its fiscal Q3 ending late October. It assumes “no more direct shipments to Huawei” amid the further Commerce Department export restrictions on the Chinese tech company (see 2008170043), said Chief Financial Officer Emeka Chukwu on a quarterly earnings call Wednesday. Q3 revenue would rise about 10% from a year earlier at the high range of the guidance. “Despite the ongoing geopolitical challenges and the macroeconomic headwinds associated with COVID-19, we believe the underlying secular demand for our key growth platforms remains solid,” said Chukwu. Huawei is “an ongoing dynamic situation,” said CEO Mohan Maheswaran. “They used to be a $80 million to $100 million account for us, so it's much, much lower now.” Semtech went with the zero shipments assumption in the guidance because it wants to “eliminate any risk” for investors, he said. “It's not a question of us not wanting to ship them.” Commerce regulations “are changing quite frequently,” he said. “So we take the approach of let's be conservative and assume no shipments.”

Comments are due Oct. 26 on a Commerce Department Bureau of Industry and Security advance NPRM to decide if there are “specific foundational technologies” that warrant “more restrictive” export controls, says Thursday's Federal Register. “Foundational technologies essential to the national security are those that may warrant stricter controls if a present or potential application or capability of that technology poses a national security threat,” it says. Foundational technologies “could include items that are currently subject to control for military end use,” it says. “Many of these items, including semiconductor manufacturing equipment and associated software tools, lasers, sensors, and underwater systems, can be tied to indigenous military innovation efforts in China, Russia or Venezuela. Accordingly, they may pose a national security threat.” The ANPRM is in docket BIS-2020-0029 at Regulations.gov.

U.S. and Chinese trade officials reemphasized their commitment to the phase one trade agreement (see 2001160022) during a Monday call, said the Office of the U.S. Trade Representative. Treasury Secretary Steven Mnuchin, USTR Robert Lighthizer and Vice Premier Liu He participated on the call, which was scheduled for earlier this month before President Donald Trump postponed it (see 2008190030). The call included a discussion on what China has done about intellectual property rights, forced technology transfer and the removal of “impediments to American companies” in the financial services and agricultural sectors, said USTR. The sides also discussed China’s “significant increases in purchases” of U.S. goods and more actions China needs to take to fulfill its phase one commitments. “Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” said USTR. China’s Commerce Ministry called the call a “constructive dialogue," in an unofficial translation. “Both sides agreed to create conditions and atmosphere to continue to promote the implementation" of the phase one deal, it said.