In a surprising turn of events, the sanctions imposed by the Biden administration on the Chinese semiconductor industry have proven ineffective in preventing a company associated with the Chinese military from receiving U.S. software and financial support.
Brite Semiconductor, a provider of design services used to manufacture computer chips, has been found to collaborate with no less than six Chinese military suppliers. What adds to the concern is that Brite has partial ownership by Semiconductor Manufacturing International Corporation (SMIC), a Chinese state-backed chipmaker currently on the U.S. entity list, which prohibits it from receiving specific goods from American suppliers. This situation raises doubts about the effectiveness of the prevailing sanctions within the ongoing trade tensions between the U.S. and China, especially in the semiconductor industry, which holds significant implications for military, consumer, and technological advancements.
Martijn Rasser, the managing director of the open-source intelligence company Datenna, described Brite as a “classic example of how a China – United States joint venture could eventually provide valuable semiconductor technology to SMIC and the People’s Liberation Army.” This underscores the potential repercussions of such partnerships, where sensitive technology might inadvertently be shared with entities carrying national security risks.
Unexpectedly, despite the existing U.S. sanctions, Brite has successfully tapped into American capital and resources without breaching any restrictions. According to reports, a U.S. venture capital firm supported by Wells Fargo and even a Christian university has invested in Brite. The chip designer has also acquired technology from California-based software companies Synopsys and Cadence Design. This raises questions about the efficacy of current regulatory measures in thwarting unauthorized access to sensitive technology.
The Biden administration initially imposed sanctions on the Chinese chip industry in October 2022, aiming to safeguard American intellectual property by restricting the collaboration between Chinese semiconductor companies and U.S. firms. In response, China retaliated by imposing restrictions on rare earth metals essential for semiconductor production, effectively escalating the ongoing trade war.
However, the effectiveness of the current sanctions has come into question. In November, the Congressional U.S.-China Economic Security Review Commission stated that the existing measures are insufficient to prevent China from gaining access to sensitive technology. Chinese companies have circumvented the sanctions by obtaining U.S. technology through third-party countries and employing questionable claims about the age and capacity of specific equipment, rendering them exempt from the sanctions.