June 21, 2023

Chinese Firms Are Evading Chip Controls

By Tim Fist, Jordan Schneider and Lennart Heim

This past fall, the Biden administration moved decisively to cut off China’s supply of powerful chips, targeting the cutting-edge semiconductors used for supercomputing and artificial intelligence. However, recent reporting points to blacklisted Chinese entities—including China’s top nuclear weapons lab—gaining access to restricted chips through a combination of smuggling and renting through the cloud. Smuggling also appears to be possible for low-level vendors: Other recent reporting found that Chinese small businesses are smuggling restricted chips through neighboring countries, and that 40,000 to 50,000 of these chips are already in China. If the administration wants to succeed in holding a chokepoint over national security-sensitive supercomputing, the U.S. agency tasked with export control enforcement (the Bureau of Industry and Security, or BIS) will have to get more creative.

The U.S. government can erect significant barriers to China using advanced computing to power a new generation of dangerous military applications.

First, some context. Last year’s export controls included a swath of measures targeting China’s access to semiconductor manufacturing equipment, specific fabrication facilities (known as “fabs”), and certain chips. The chip-specific controls attempted to ban Chinese entities from procuring advanced AI chips based on fixed performance thresholds. The ban applies not just to U.S.-made chips, but also to any chip produced using U.S.-origin technology, software, or equipment.

Read the full article from Foreign Policy.

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