A group of US politicians warned that Washington’s plans to impose new export restrictions on China could plunge American technology companies into a death spiral.
In a letter this week, California Democrats urged President Joe Biden to hold off on plans to further tighten restrictions on the flow of American technology to China until Washington can persuade its rivals to help.
They argued that the current unilateral restrictions benefit foreign competitors and come at the expense of American companies.
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The US has imposed a series of restrictions since 2022 to deny China access to advanced chips and chip manufacturing technologies, with Washington arguing that Beijing is using the technology to strengthen its military.
US allies Japan and the Netherlands – home to powerful chipmakers ASML and Tokyo Electron – have also restricted their equipment exports to China. But both countries have failed to join the strictest US measures.
Washington is now planning to introduce a new rule that would extend US powers to Stop the export of semiconductor manufacturing equipment from some countries to Chinese chip manufacturers. However, companies in Japan and the Netherlands remain exempt from these rules.
These new measures “could plunge long-established U.S. companies into a death spiral” because U.S. allies have not imposed similarly aggressive export restrictions to China on their own companies, California Senator Alex Padilla and Representative Zoe Lofgren argued in a letter on Tuesday.
“We ask that you suspend further unilateral export controls until you have adequately demonstrated that such controls will not harm U.S. competitiveness in advanced semiconductors and semiconductor manufacturing equipment,” said the letter to Alan Estevez, who is responsible for export controls at the U.S. Department of Commerce.
The Commerce Department said it had been contacted by the congressional office and would respond through appropriate channels.
“Not against restrictions in China”
The letter is a sign of growing opposition to Biden’s semiconductor policy among Democrats in California, where LAM, Applied Materials and KLA, the largest U.S. chipmakers, are based.
LAM Research had previously warned that the US restrictions would mean a $2.5 billion hit to its sales. In 2023, sales to China accounted for 26% of its revenue, five percentage points lower than in 2022. The chipmaker said the US restrictions on China exports had “adversely” affected its sales.
They “could potentially do so on an even larger scale in the future,” it warned.
Applied Materials and KLA also estimated that the restrictions aimed at China would result in sales losses of more than $500 million. Applied Materials is even under several criminal investigations for secretly large shipments of chip manufacturing equipment to China’s largest chipmaker SMIC, despite restrictions from Washington.
However, the California lawmakers argued that they were not asking Biden to roll back restrictions on China. They were simply opposing the introduction of rules “with questionable national security benefits” if allies do not follow suit.
“We urge you to use all leverage available to the U.S. government to force our allies to align their export controls with ours,” they wrote.
- Reuters, with additional contributions from Vishakha Saxena
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