The US wants to ban government deals with chip makers in China

The US wants to ban government deals with chip makers in China
  • Two US senators have lobbied to ban the American government from doing business with chip makers in China.
  • They have pushed for an amendment blocking federal access to semiconductor products and services made by Chinese companies, to enter the final version of the National Defense Authorization Act this year.

In the United States (US), only one bill in Congress makes it into law every year: the National Defense Authorization Act (NDAA). Because the bill is reliably passed every year, lawmakers annually try to get what issues they are passionate about to be added to the bill in the hope that it becomes law. The NDAA in the US is even a frequent tool for China-related provisions that have strong bipartisan support.

That said, and the US-China conflict took place centering around the final semiconductortwo US senators have been lobbying hard for restrictions on the government’s business with Chinese chipmakers, report Thursday by Politics shows, citing three people familiar with the problem. Indeed, Majority Leader Chuck Schumer and Sen. John Cornyn has proposed an amendment that would block federal access to semiconductor products and services made by Chinese firms.

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Since they got their proposal to the Senate NDAA last month in the October managers’ package, they are now working to sign the final version of the NDAA this year. “The measure will expand the provisions in Article 889 which has banned government agencies from doing business with Chinese telecommunications companies or contractors that use their technology,” Politics the report shows.

What does Section 889 of the NDAA mean for US-China relations?

First passed in the 2019 NDAA, Section 889 is primarily targeted Chinese conglomerates like Huawei or ZTE. Now, Schumer-Cornyn measures will grow the target list including chip players China Semiconductor Manufacturing International Corp, Yangtze Memory Technologies Corp. and ChangXin Memory Technologies.

Apparently, both the Senate and the House of Representatives are now disputing over the final version of the must-pass defense bill. In essence, the amendments that could be passed could chart their course and lead to a clash between lawmakers who each want their priorities to be reflected in the behemoth legislation. Politico’s Reports also indicate that it is not yet clear if Schumer and Cornyn will be successful in their efforts, but it should be noted that there is bipartisan support for ending the federal government’s business with Chinese companies.

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What helps the case is that Schumer is the chamber’s top official. Whatever is said and done, the fiscal 2023 NDAA must pass the Senate and House of Representatives later this year before it can be sent to the White House for President Joe Biden to sign into law. Of the aforementioned Chinese chip makers, YMTC in particular has come under increasing scrutiny for violating export controls by continuing to supply chips to Huawei and aiming to do business with Apple.

It was Schumer and Cornyntogether with Senators from both parties, who had railed against our firm moves. Apple even dropped its plans to use YMTC chips in October under enormous bipartisan political pressure. The US has even added YMTC to its “unverified list” – which features US companies that cannot be trusted to check to make sure they follow export rules.

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Apparently, the Chinese chip company is now at risk of going on the Entity List in December, basically prohibiting YMTC from trading in the US. News about the NDAA amendment by Schumer and Cornyn came just a month after the Biden administration was announced set sweeping export controlincluding measurements for be cut China’s semiconductor chips are certainly made anywhere in the world with US equipment.

Responding to the move by the US, officials from the People’s Republic of China (PRC). I that’s a harder one decoupling could cost US semiconductor companies 18% of their global market share, 37% of their revenue, and up to 40,000 jobs. In 2021, Chinese state media Notes, Intel’s income was $74.7 billion, of which 30 percent was from China. The PRC even stated that the subsidies from the CHIPS Act would be enough to lure companies away from the Chinese market.







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