Representative Mike Gallagher, leader of the United States House Committee on China, has demanded an immediate freeze on technology exports to Huawei and Semiconductor International Manufacturing Corp., escalating US-China tech tensions. The motion follows the discovery of new Huawei smartphone semiconductors that experts say may breach trade rules.
An influential Republican legislator, Gallagher has long pushed for tougher restrictions on the sale of American technology to China. According to Reuters, the lawmaker noted that the most recent chip finding raises significant questions regarding the observance of US trade laws.
What is the problem with the new Huawei phone?
The Huawei Mate 60 Pro smartphone was just released, and because of its processor, it has caused some debate. Analysts claim that this chip has a technological innovation that was only possible with American technology and may have come from SMIC. Representative Gallagher voiced worry that this would go against the Foreign Direct Product Rule of the Department of Commerce.
Since May 2019, Huawei has been under fire and was included on a trade blacklist due to concerns about national security. Due to this move, US suppliers needed specific permissions in order to provide the firm with items. When SMIC was added to the entity list in December 2020 due to concerns about technology being diverted for military uses, it too was subject to limitations.
To implement the Foreign Direct Product Rule, which attempts to stop businesses worldwide from using US tools to produce chips for Huawei, trade restrictions were placed on Huawei and SMIC. However, suppliers to both businesses gained billions of dollars in rights to market U.S. technology, with 90% going to SMIC.
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A Slap in The US' Face
These developments, according to TechInsights analyst Dan Hutcheson, are a "slap in the face" to the United States, according to a report from The Guardian. SMIC, once recognized for its 14nm chips, apparently succeeded in producing 7nm chips by modifying less complex machinery. However, this strategy is linked to reduced chip yield rates, which could restrict the shipping of smartphones.
Extreme ultraviolet lithography (EUV), for example, is still a hot topic in the competition for cutting-edge chip manufacturing technologies. China's attempts to manufacture controlled technologies are being heavily penalized by the US in an effort to keep EUV technology out of Beijing's hands.
China has announced intentions to build a $40 billion state-backed investment fund to support its semiconductor business as part of an aggressive effort to close the technology gap.
