U.S. Cuts Off its Chips to Spite its Face

By Ernest Worthman, Executive Editor, AWT magazine, Senior Member, IEEE

May 27, 2020

Ern’s Perspective

Worthman

The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce recently announced plans to restrict Chinese vendor, Huawei’s ability to use U.S. chipmaking equipment and software to design and manufacture its semiconductors abroad. Specifically, in a statement the BIS said it wants to halt “Huawei’s efforts to undermine U.S. export controls,” and “narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

This came about because, according to the government, Huawei is still using U.S.-based technology, which they likely obtained in arrangements with U.S. companies. The U.S. makes it sound like this is stolen IP. I doubt it. This administration has shown, over and over, it lies about such things and never provides any substantiation for its accusations.

What is the real purpose of this other than to further punish Huawei and China? This is way beyond reasonable already. It is one thing to try and decouple China’s tech as a gentlemen. However, being a gentlemen seems to be foreign to this administration and much of the Senate.

It is not the responsibility of this country to effect happenings outside of its borders by threatening other nations. That has been a game plan for this administration for some time. Fortunately, most countries have simply, and politely (with the class we are lacking) refused and set their own path based on what they have come up with. None have gone as far as this country has to try and wreak havoc on China.

This is nothing more than another attack on Huawei and China. This administration has used everything from blackmail to threats, externally and internally, to financial manipulation, and more, to punish China.

Oddly enough, in a quirky turn of fate, this has been backfiring on this country since the beginning, not just in the tech sector, but across a variety of industries from agriculture to manufacturing. In the wireless segment, for example, we will have a much less advanced 5G ecosystem that will take longer to develop and deploy.

These actions are doing just as much, if not more, to damage to our country as to China. In the long run, China will fare better than the U.S. if the present course continues. This country is in financial disarray currently and all this administration can think to do is find more ways to punch the already struggling American economy.

As I have alluded to in previous missives, this is a global economy. What happens anywhere influences the global economy – some more, some less, but an effect, nonetheless. That is one reason countries are both pushing back against this administration’s policies as well as starting to do some decoupling of their own with some of America’s industry. It is puzzling to me as to why the administration continues this myopic dogma.

Of course, what I just penned is not universal. Most U.S. allies, as well as other nations, are somewhat fluid with this. But make no mistake, they are certainly not as comfortable with America’s goings-on as they have been in the past.

This particular action comes on the heels of the U.S. cuddling up to Taiwn-based TSMC, the world’s first dedicated semiconductor foundry, in an effort to find suppliers to build wafer plants and manufacture on American soil. TSMC has noted that it will stop taking orders for chips from Huawei, who was one of TSMC’s biggest customers. Okay, I suspect this is a placating move on TSMC’s part to keep the peace and pushed by this government.

I do not see the TSMC deal working out. TSMC is in China – Taiwan, albeit, but still in China. And, China has been making noise that it is a part of China and not a sovereign nation. It has been hinting it wants to bring it into the China fold for some time now. As the tensions between the U.S. and Huawei escalate, I have no doubt that China may revisit this.

Furthermore, China will just expand their own mainland production. After this action they will be pouring over $2 billion into Semiconductor Manufacturing International.

This government “believes” (and wants us to believe) that Huawei has continued to use U.S. software and technology to design semiconductors. First of all, they “believe” so they have no proof. Next, this is not news. It has been going on all along. Now the administration claims that this undermines national security and circumvents the entity list, because they are using other foundries, not on that list.

Secretary of Commerce Wilbur Ross noted that “despite the entity List actions the department took last year; Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies. We must amend our rules exploited by Huawei and HiSilicon and prevent U.S. technologies from enabling malign activities contrary to U.S. national security and foreign policy interests.” Blah, blah, blah. This is the same ridiculous diatribe parroted by so many of the Trump cabinet.

It seems this government has become a global bully. This follows along the lines of threatening not to share security information with allies, withholding aid, and limiting trade. Now they are telling other countries to whom they can and cannot sell. It can, certainly, restrict them from doing business here, but it is certainly arrogant of our government to assume to be able to control other nations. And, to attempt to blackmail them is quite appalling.

This is a backdoor approach to try and cripple more of Huawei’s business. TMSC is an independent chipmaker that has worked with Huawei, and dozens of other nations, for years. Another cheap shot from this government.

The bottom line is that this will simply add to the woes of an already struggling semiconductor industry in America. What is the plan? To give all of our semiconductor manufacturing capabilities to a Taiwanese company, even if they build fabs here? That sounds like a winner to me! What will be next? Inviting Russia to build our voting machines?

Oh, and by the way the Department of Commerce has extended Huawei and its non-U.S. affiliates Temporary General License (TGL) until August 13.

One just must laugh. Out of one side of this government’s mouth come all kinds of hawkish talk. But under the covers, business as usual under the guise that the extension will allow Huawei-dependent telecoms to find other vendors. However, such telecoms are mostly rural and are not all that happy about the government’s edict anyway.

I do get that we need to vet our supply chain. What I do not get, or like, is the ugly American face we seem to feel the need to present to the world.

At this point in history, if the U.S. goes all-out toe to toe with China, we will not win. America cannot be made great again by becoming isolationist or conspiring with the Russians to win elections.