US adds Chinese supercomputing companies to export blacklist

A staff member works beside China's 'Sunway TaihuLight' supercomputer at the National Supercomputer Center on August 29, 2020 in Wuxi, Jiangsu Province of China.
Enlarge / A staff member works beside China’s ‘Sunway TaihuLight’ supercomputer at the National Supercomputer Center on August 29, 2020 in Wuxi, Jiangsu Province of China.
China News Service | Getty Images

The US has placed Chinese groups accused of building supercomputers to help the Chinese military on an export blacklist, the first such move by the Biden administration to make it harder for China to obtain US technology.

Three companies and four branches of China’s National Supercomputing Center were added to the US government “entity list,” which bars American companies from exporting technology to the groups without a license.

The US commerce department said the groups were involved in building supercomputers used by Chinese “military actors” and facilitating programs to develop weapons of mass destruction.

“Supercomputing capabilities are vital for the development of many—perhaps almost all—modern weapons and national security systems, such as nuclear weapons and hypersonic weapons,” said Gina Raimondo, the US commerce secretary.

She said the administration would use “the full extent of its authorities to prevent China from leveraging US technologies to support these destabilizing military modernization efforts.”

The Chinese entities are Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, and the National Supercomputing Center branches.

The US is concerned about China gaining access to American technology that helps the People’s Liberation Army close the gap with the US military and field weapons that could alter the balance of power in the Indo-Pacific.

The Washington Post this week said Phytium designed semiconductors using US technology to power supercomputers being employed to develop hypersonic missiles, which are hard to detect because of their speed.

The newspaper said Phytium used technology from Cadence Design Systems and Synopsys. The entity list move would effectively prevent the two California-based companies from providing services and products to the Chinese firms. But it would not bar them from supplying the Chinese groups if that technology were produced in facilities outside of the US.

The Washington Post said Phytium outsourced the manufacturing of its chips to TSMC, the Taiwanese company that has become the world’s most advanced semiconductor manufacturer.

The Financial Times previously reported that the Trump administration had pressed the Taiwanese government to restrict TSMC from producing chips for Huawei, which it said were being used in Chinese missiles.

Placing the Chinese groups on the entity list also does not bar TSMC from supplying them with chips since the US did not employ the “foreign direct product rule”—which would ban any foreign company that uses US technology, such as TSMC, from exporting to Phytium or the other groups.

The Trump administration used that rule to implement tough export controls related to Huawei in a move that closed previous loopholes.

Michael McCaul, the top Republican on the House foreign affairs committee, welcomed the move to put Phytium on the entity list but said it was only a “half-measure” because the foreign direct product rule was not invoked.

“The lessons we learned from the loopholes in the Huawei entity listing must be incorporated as standard operating procedures for our export control policy to ensure they are truly effective,” McCaul said.

But Lindsay Gorman, a technology expert at the German Marshall Fund, said that by using a tool that was frequently employed by his predecessor, Biden had “put to bed” any sense that he would not be tough on China.

“It was an open tool whether a favored tool of the Trump administration would be continued in the Biden administration,” Gorman said.

Trump put dozens of Chinese companies on the entity list, including Huawei, the telecoms equipment manufacturer, and Semiconductor Manufacturing International Corporation.

The Biden administration is reviewing dozens of China-related actions that Donald Trump took in his last year in office, including an order that prohibits Americans from investing in Chinese companies that the Pentagon says help the People’s Liberation Army. The US is also talking to allies in Asia and Europe to try to find ways to coordinate export controls.

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