Republican Senator John Cornyn and Senate Majority Leader Chuck Schumer are fervently promoting a ban on government contracts with Chinese chipmakers. The proposal would expand Section 889's existing prohibitions against federal agencies doing business with Chinese telecommunications firms or contractors who make use of their technologies.
Politico reports that the senators want their amendment, which prohibits federal access to semiconductor goods and services produced by Chinese companies, to be included in the National Defense Authorization Act (NDAA) final draft. Before being delivered to the White House for President Joe Biden to sign into law, the fiscal 2023 NDAA must pass the Senate and House of Representatives later this year.
As part of the October managers package, Schumer and Cornyn's idea was last month added to the Senate NDAA. They now want to complete the work. The 2019 NDAA's Section 889, which was initially enacted, primarily targets Chinese companies like Huawei and ZTE. However, the Schumer-Cornyn bill would expand the list of targets to include ChangXin Memory Technologies, Yangtze Memory Technologies Corp., and Semiconductor Manufacturing International Corp.
The final draft of the defense legislation, which must pass, is now being debated in the Senate and the House. A bitter battle amongst lawmakers who all want their goals included in the massive legislation can start depending on whose changes are accepted.
Although it's unclear whether Schumer and Cornyn's initiative will be successful, there is bipartisan support for limiting any business that the federal government does with Chinese companies. Schumer's position as the head of the chamber also helps.
Particularly YMTC has drawn more attention to breaking export laws by continuing to provide chips to Huawei and seeking to do business with Apple. Schumer and Cornyn, two senators from opposing parties, blasted the firm's actions. In October, Apple abandoned a proposal to employ YMTC chips because of intense political pressure from both sides of the aisle.
In the same month, the United States put YMTC on the "unverified list" of businesses it can't consistently check to make sure they abide by export regulations, kicking off a 60-day clock for much worse punishment. The business now runs the prospect of being added to the Entities List in December, thereby banning YMTC from conducting business in the country.
The Biden administration released a comprehensive set of export regulations last month, which included a rule blocking China's access to specific semiconductor chips produced anywhere in the globe using U.S. techniques.