How America's Export Controls Failed to Keep Cutting-Edge AI Chips from China's Huawei (stripes.com) 17
An anonymous reader shared this report from the Washington Post:
A few weeks ago, analysts at a specialized technological lab put a microchip from China under a powerful microscope. Something didn't look right... The microscopic proof was there that a chunk of the electronic components from Chinese high-tech champion Huawei Technologies had been produced by the world's most advanced chipmaker, Taiwan Semiconductor Manufacturing Company.
That was a problem because two U.S. administrations in succession had taken actions to assure that didn't happen. The news of the breach of U.S. export controls, first reported in October by the tech news site the Information, has sent a wave of concern through Washington... The chips were routed to Huawei through Sophgo Technologies, the AI venture of a Chinese cryptocurrency billionaire, according to two people familiar with the matter, speaking on the condition of anonymity to discuss a sensitive topic... "It raises some fundamental questions about how well we can actually enforce these rules," said Emily Kilcrease, a senior fellow at the Center for a New American Security in Washington... Taiwan's Ministry of Economic Affairs confirmed that TSMC recently halted shipments to a "certain customer" and notified the United States after suspecting that customer might have directed its products to Huawei...
There's been much intrigue in recent days in the industry over how the crypto billionaire's TSMC-made chips reportedly ended up at Huawei. Critics accuse Sophgo of working to help Huawei evade the export controls, but it is also possible that they were sold through an intermediary, which would align with Sophgo's denial of having any business relationship with Huawei... While export controls are often hard to enforce, semiconductors are especially hard to manage due to the large and open nature of the global chip trade. Since the Biden administration implemented sweeping controls in 2022, there have been reports of widespread chip smuggling and semiconductor black markets allowing Chinese companies to access necessary chips...
Paul Triolo, technology policy lead at Albright Stonebridge Group, said companies were trying to figure out what lengths they had to go to for due diligence: "The guidelines are murky."
That was a problem because two U.S. administrations in succession had taken actions to assure that didn't happen. The news of the breach of U.S. export controls, first reported in October by the tech news site the Information, has sent a wave of concern through Washington... The chips were routed to Huawei through Sophgo Technologies, the AI venture of a Chinese cryptocurrency billionaire, according to two people familiar with the matter, speaking on the condition of anonymity to discuss a sensitive topic... "It raises some fundamental questions about how well we can actually enforce these rules," said Emily Kilcrease, a senior fellow at the Center for a New American Security in Washington... Taiwan's Ministry of Economic Affairs confirmed that TSMC recently halted shipments to a "certain customer" and notified the United States after suspecting that customer might have directed its products to Huawei...
There's been much intrigue in recent days in the industry over how the crypto billionaire's TSMC-made chips reportedly ended up at Huawei. Critics accuse Sophgo of working to help Huawei evade the export controls, but it is also possible that they were sold through an intermediary, which would align with Sophgo's denial of having any business relationship with Huawei... While export controls are often hard to enforce, semiconductors are especially hard to manage due to the large and open nature of the global chip trade. Since the Biden administration implemented sweeping controls in 2022, there have been reports of widespread chip smuggling and semiconductor black markets allowing Chinese companies to access necessary chips...
Paul Triolo, technology policy lead at Albright Stonebridge Group, said companies were trying to figure out what lengths they had to go to for due diligence: "The guidelines are murky."
A lesson from long, long ago (Score:3, Insightful)
"The more you tighten your grip, America, the more manufacturers will slip through your fingers."
- Princess Laia -
Or something like that. I heard the quote long, long ago and far, far away, and my memory ain't what it used to be.
Re: (Score:2)
I cannot fathom the beltway morons that thought they could pull this off. They cannot even solve any of the US problems on their own ground, and they think they can pull this off on the other side of the world...
I'll just leave this here as one angle to why this whole ordeal might have happened: https://www.ianwelsh.net/the-l... [ianwelsh.net]
Re: (Score:2)
Excellent article. Thanks for the link.
No surprise (Score:2)
No surprise here. Export Controls in many large companies is a joke. Yes, the companies do try and follow the laws, but funding for this area is quite low and lots of items do slip through. If the company get caught, pay the fine, make slight adjustments and move on.
Plus how would you stop say a company ing a "good" country buying the items and in turn sell them to a "bad" company, while adding a nice large markup ? Tough process all around.
Duh! (Score:3)
"It raises some fundamental questions about how well we can actually enforce these rules," said Emily Kilcrease, a senior fellow at the Center for a New American Security in Washington.
Believing that regulations from an entire ocean away had a chance of preventing high-value tech from crossing the Taiwan Strait is, to put it kindly, hubris. Perhaps more realistically, I would call it magical thinking. For all the alarm bells they ring about the dangers posed by China, the US seems to pretty consistently underestimate Chinese capabilities and persistence.
America really needs to turn itself back into the world's premier source of technology, both in innovation and in manufacturing. But I suspect nobody has the guts to pull away from globalization and toward self-sufficiency. When almost everything you produce and consume goes through or relies on global supply chains, your shit isn't really under your control. It's like cloud-based services - it's there until it's not, and when it disappears there's not much you can do about it.
Re: (Score:3)
But I suspect nobody has the guts to pull away from globalization and toward self-sufficiency
Except the fact that the US now has a brand new TSMC factory operating [bloomberg.com] and over a dozen more projects underway. In specific cases I would absolutely agree that the US needs to internalize *certain* sectors for national security reasons and when you have a bad economic actor operating (China) then you can sacrifice some economic growth for some protectionism.
However the US lacks the labor capacity to manufacture entire supply chains for most industries, nor is it efficent economically for any nation to do s
When cargo value much greater than shipping cost (Score:3)
The bribes and additional security for operating at shady ports cost more than the additional shipping costs.
This is not surprising (Score:2)
Bans don't work
See the drug war for another example
Re: (Score:2)
Bans don't work See the drug war for another example
Bans/sanctions don't have to completely end the stream of high-tech chips to China. They only have to work well enough to make the supply of these chips so unreliable that a company like Huawei becomes seriously nervous about staking the future of their premium product lines on sporadic chip deliveries from a bunch of smugglers. Sanctions can do that if you follow them up with vigor and sanction any company that sells chips to a China based entity. You don't even have to sanction all of them, just find some
Oh no (Score:1)
That terrible, evil, and mean country that manufactures everything we depend on is doing something we don't like. Let's pretend to wag our finger at them while we do nothing of consequence.
NOT the goal (Score:2)
The goal of the ban is not to prevent China from ever having access to the good chips. It is to slow down their progress. A small amount of chips smuggled in via shell companies is irrelevant. As long as they are advancing slower than they would with unrestricted access, the ban is a success.
Re: (Score:2)
Looks to me that what is happening is _exactly_ the opposite of what was supposedly intended. Not that this is any surprise.
Protectionism typically fails (Score:2)
And this is protectionism, nothing else. An industry that instead of shaping up bribed politicians to "protect" them. All this does is accelerated R&D on those supposedly limited here.
Was always going to be leaky (Score:2)
More important is the fab tech, and even that will leak in, eventually.
The goal is to keep China at least a few years behind the west, just in case current semiconductor tech and AI turn out to be some sort of total-game-changer and the first people to get there wind up with some sort of world-changing, world-dominating advantage. I seriously doubt it will, but it might, and if it happens, we want to get there first.