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California Democrats fear US tech firm 'death spiral' with more China curbs
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California Democrats fear US tech firm 'death spiral' with more China curbs
Aug 14, 2024 12:37 PM

WASHINGTON, Aug 14 (Reuters) - California Democrats are

calling on the Biden administration to freeze reported plans to

impose fresh restrictions on U.S. technology exports to China,

arguing unilateral curbs benefit foreign rivals at the expense

of U.S. businesses.

Washington has imposed a raft of restrictions on exports of

chips and chipmaking equipment to China in recent years, fearing

Beijing could use the technology to bolster its military. The

Netherlands and Japan, home to chipmaking equipment producers

ASML and Tokyo Electron ( TOELF ) respectively, have

also restricted equipment exports to China but stopped short of

matching some of the toughest U.S. measures.

Reuters reported last month that the Commerce Department

plans a new rule that will expand U.S. powers to stop exports of

semiconductor manufacturing equipment from some foreign

countries to Chinese chipmakers, but will exempt Japan and the

Netherlands.

In a letter dated Aug. 13, Senator Alex Padilla and

Representative Zoe Lofgren argued that a further round of

controls "could send longstanding U.S. companies into a death

spiral," because U.S. allies have not imposed similarly

aggressive China export curbs on their own companies.

"We ask that you pause additional unilateral export controls

until you have adequately justified that such controls will not

damage U.S. competitiveness in advanced semiconductors and

semiconductor manufacturing equipment," the lawmakers said in

the letter, addressed to Alan Estevez, who oversees export

controls at the Commerce Department.

Commerce said it had been contacted by the congressional

office and would respond through appropriate channels.

The letter is a sign of growing pushback against Biden's

semiconductor policy among Democrats from California, home to

the U.S.'s top chipmaking equipment companies LAM,

Applied Materials ( AMAT ) and KLA.

In April, Democratic California Governor Gavin Newsom and

Padilla urged the Biden administration to reverse its decision

to cancel a subsidy program for building and expanding

semiconductor research and development facilities. That program

had been seen as likely to benefit Applied Materials ( AMAT ).

In their August letter, Padilla and Lofgren stressed that

they were not asking Biden to roll back restrictions on China,

but simply opposed the imposition of rules "with questionable

national-security benefits" when allies do not follow suit.

"We urge you to use all forms of leverage available to the

U.S. government to bring our allies along in aligning their

export controls with ours," they wrote.

In June, Reuters reported that Estevez traveled to Japan

after meeting with the Dutch government to urge the allies to

further restrict China's ability to produce cutting-edge

semiconductors.

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