US and China to keep talking about chip bans, just not when they'll end

Intel and Micron made the agenda, but action to ease their woes did not

The US Commerce Department said on Monday that it's reached an agreement with Chinese authorities to facilitate the exchange of export control enforcement information – a pact that means the two nations will talk about tech export bans, without seeking to alter them.

The agreement was made during a meeting between US secretary of commerce Gina Raimondo and her Chinese counterpart, minister of commerce Wang Wentao. The meeting included discussions about China's restrictions on US chipmakers Intel and Micron.

According to the Commerce Department, the export info exchange is aimed to limit policy misunderstandings. It will commence through an in-person meeting of assistant secretary-level representatives on Tuesday in Beijing.

The Monday talks did touch on some more specific chiptech concerns. Reuters reports the ministers chatted about China's recent curbs on exports of chipmaking materials gallium and germanium – again without reaching an outcome.

Raimondo reportedly raised China's ban on US memory maker Micron – a topic the ministers considered in late May, after China's Cyberspace Administration (CAC) ruled that the chip shop is a threat to Chinese national security and ordered some local organizations to stop using its products. Some have speculated that the move was performative, and a tit for tat move in response similar bans on Chinese products in the United States.

The same scenario has been suggested as a reason Beijing did not sign off on Intel's acquisition of foundry biz Tower, leading to the deal collapsing.

Meanwhile, Chinese state-owned media reported that Wang raised concerns over issues related to "tariffs on Chinese goods, its semiconductor policies, restrictions of two-way investment, discriminatory subsidies, and sanctions on Chinese enterprises."

Chipmaking imports boom Imports of semiconductor equipment to China hit record highs this June and July ahead of looming export bans. The Financial Times reported imports rose 70 percent year on year for those two months, from $2.9 billion to $5 billion.

"While it is not clear how much of the increase in imports relates to tools that will be covered by restrictions, the purchases suggest China wants to avoid any disruption to its plans to expand chip production," the outlet opined.

In addition to agreeing to exchange information, Raimondo and Wang established a commercial issues working group – focused on resolving trade and investment concerns – that will meet twice a year at the vice ministerial level, beginning in 2024.

Furthermore, they agreed to arrange technical discussions with subject matter experts on how to protect trade secrets and confidential business information while undergoing licensing proceedings.

And they agreed to meet at least once a year in person, while communicating regularly at the secretary and minister level regarding commercial and economic issues.

The US Commerce Department said Raimondo reinforced the philosophy "that [US] export controls are narrowly targeted at technologies that have clear national security or human rights impacts and are not about containing China's economic growth."

She also acknowledged the difficult state of US/China relations.

"It's a complicated relationship; it's a challenging relationship. We will of course disagree on certain issues, but I believe we can make progress if we are direct, open, and practical," said Raimondo in public remarks ahead of the meeting.

"Of course in matters of national security, there is no room to compromise or negotiate," she added.

Before Raimondo's trip to China, the US Commerce Department removed 27 Chinese companies from a list that bans them from accessing US technology.

"China welcomes the US decision of removing the Chinese entities from the unverified list. It shows that the two sides can address specific concerns through communication on the basis of mutual respect. China will continue to firmly defend the lawful rights and interests of Chinese companies and institutions," said Chinese foreign minister Wang Wenbin last week. ®