Today I will review the report published by the House Foreign Affairs Committee where they discuss how ineffective the US has been in restricting the export of important technology to China. The report makes me believe that the US is going to take a very aggressive approach towards semiconductor companies who sell to China.
Based on the tone of the report, the long-term revenue projections semiconductor companies in the US are making seem to be wishful thinking. These companies get 36% of their revenues from China, so the implementation of harsh export restrictions will lead to a dramatic drop in their sales.
Below is the Foreign Affairs Committee report with my comments.
The chart below shows the technologies China is dominant in. This chart is mentioned on page 3 of the report.
Some Codes Mentioned in the Report
15 CFR 750.3 (Page 19 of report): Explains suggestion that Bureau of Industry and Service (BIS) include other agencies in the decision making process.
Section 742.4 (Page 20 of report): Explains goods being restricted for national security reasons.
National Security Directive (NSD) 189 about Fundamental Research (Page 37 of report): Explains research in science and technology that is widely available among scientific community but can be used for nefarious reasons by foreign countries.
I wonder what strings will be attached to the money companies get from the CHIPS Act. Prior to the US being embarrassed by Huawei releasing their 7 nm phone in September, companies getting money from the CHIPS ACT couldn't expand any leading edge manufacturing in China. The conditions might be more restrictive now.
Below are some interesting videos that I came across. One discusses the rise of Xi Jinping, and the other is the Secretary of Commerce discussing how she plans to restrict China's access to American technology.
The videos below do not belong to us. The creators are mentioned in each video.
THE RISE OF XI JINPING
SECRETARY OF COMMERCE: PLANS FOR CHINA
CONCLUSION
I believe analysts and investors need to press the semiconductor companies more on their plans to move away from China. At the moment, their plans lack details because the companies don't want to say anything that will upset Xi Jinping. I really don't think investors are taking this China situation seriously enough.
The House Foreign Affairs Committee is having a hearing with the Bureau of Industry and Security on December 12. God willing, I will watch it to gain a better understanding of America's plan to curtail exports to China.
Stay strong, stay blessed, and God willing, I will see you next week.
The prudent sees danger and hides himself, but the simple go on and suffer for it.
Proverbs 22:3 ESV
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