A bipartisan group of heavyweight members of the U.S. House of Representatives is urging the Biden administration to prevent the Chinese telecommunications giant Huawei from circumventing sanctions to purchase U.S. semiconductor manufacturing equipment, further curbing the Chinese Communist Party’s development of advanced semiconductors.
On Wednesday, October 16th, the Republican chairman of the House Select Committee on the CCP, John Moolenaar, and the committee’s chief Democratic representative, Raja Krishnamoorthi, jointly wrote to Secretary of Commerce Gina Raimondo, emphasizing the need to restrict the flow of U.S. Semiconductor Manufacturing Equipment (SME) to Huawei.
The lawmakers stated that just as the Department of Commerce took steps to ban Huawei from buying U.S. chips, limiting the flow of Semiconductor Manufacturing Equipment (SME) to Huawei is “equally important and logical.”
The letter warned that Huawei is using companies not currently blacklisted by the U.S. as part of its “secret semiconductor company network” to expand its semiconductor production capacity.
Huawei is reportedly utilizing a “secret semiconductor company network,” which includes Chinese chip companies such as Pengxinxu Technology Co., Ltd., SwaySure Technology Co., Ltd., and Qingdao Sinocorn Technology Co., Ltd., to evade existing restrictions imposed by the U.S. Department of Commerce. These companies are currently not on the Entity List of the Department of Commerce.
Previously, one entity, Shenzhen Pengxinxu Integrated Circuit Manufacturing Co., Ltd. (PXW), had been added to the Department of Commerce’s Entity List. The lawmakers suggested that the Department of Commerce take similar action to add other members of Huawei’s secret network to the Entity List.
The letter also emphasized the state-owned background of these companies. Shenzhen Major Industry Investment Group Co., Ltd., supported by the Shenzhen municipal government, oversees Pengxinxu (PXW) and its sister company, SwaySure, which are developing advanced storage chips for artificial intelligence. According to Chinese media reports, similar to Pengxinxu, SwaySure is also operated by former Huawei executives, engaging in “supply chain collaboration and research” with Huawei.
The lawmakers believe that adding these companies to the Entity List will further restrict Huawei’s access to U.S. technology and stated, “This provides the U.S. with an opportunity to reject Huawei’s chip ambitions. These ambitions clearly threaten our national security.”
If this effort fails, the lawmakers warn that Huawei’s chips will dominate the global market, benefiting only a small fraction of U.S. companies producing semiconductor equipment while sacrificing the interests of global chip manufacturers, thus undermining the intention to restrict Huawei and posing a threat to our national security.
In conclusion, the lawmakers emphasized, “We must continue our efforts to prevent Huawei and similar companies from accessing U.S. technology that could compromise our national security.”
Simultaneously, they urged the Department of Commerce to swiftly take action, stating that “prolonged negotiations will allow Huawei to continue stockpiling the semiconductor equipment necessary to rebuild its supply chain.”
The U.S. and its allies are actively working to prevent global semiconductor suppliers from selling the most advanced chips and manufacturing equipment to the Chinese Communist regime. This includes major U.S. semiconductor manufacturing equipment producers such as Applied Materials, KLA Corp., and Lam Research, as well as Dutch photolithography system manufacturer ASML and Japanese Tokyo Electron.
Washington has also imposed additional sanctions on multiple Chinese companies, including Huawei and its partner SMIC, prohibiting the purchase of U.S. technology without U.S. government permission. However, Chinese companies not on the Entity List can still acquire chip equipment without approval from Washington.
The U.S. restrictions on Huawei’s chip manufacturing capabilities are part of broader efforts by Washington to curb the CCP’s access to advanced technology. The lawmakers’ push for further action marks the latest development in the U.S. efforts to counter the CCP’s expansion in the high-tech sector, with far-reaching implications for the global semiconductor supply chain.
The Department of Commerce is responsible for overseeing trade restriction lists and export controls on advanced chips and manufacturing equipment. A Department of Commerce spokesperson indicated that they had received the letter and would respond through appropriate channels.
(This article references reporting from Bloomberg.)