U.S. lawmakers ease proposed curbs on Chinese chips amid corporate pushback

 U.S. senators have scaled back a proposal that placed new curbs on the use of Chinese-made chips by the U.S. government and its contractors, according to a recent draft seen by Reuters, amid pushback from trade groups like the U.S. Chamber of Commerce.

The move is the latest example of industry's efforts to weaken proposals aimed at crimping China's burgeoning tech sector, by pointing out how such measures will raise costs.

Top Senate Democrat Chuck Schumer and John Cornyn, a prominent Republican China hawk, unveiled a measure in September that would have required U.S. federal agencies and their contractors to stop using semiconductors manufactured at China's SMIC, as well as chips made by Chinese memory chip leaders YMTC and CXMT.

The text of a new version of the measure, dated Dec. 1, no longer forbids contractors from "using" the targeted chips and pushes the compliance deadline back to 5 years from the immediate or 2 year implementation deadlines included in the first version.

"This does not clearly prohibit contractors from themselves using covered semiconductor products," said Robyn Burrows, a lawyer at Blank Rome specializing in federal contracting, when asked to read excerpts of the new draft.

Chips made by SMIC are commissioned by companies all over the world and can be found in products as diverse as cell phones and cars. They are difficult to identify because chips are not typically labeled with the names of the companies that manufacture them.

The measure, which was pitched as an amendment to the National Defense Authorization Act (NDAA), drew fire from the Chamber of Commerce and other trade groups, who said in a letter last month that it would be costly and difficult for companies to determine whether SMIC manufactured the chips contained in a vast array of electronics.

The powerful U.S. business group argued in a letter signed by telecommunications and defense industry groups that rooting out such chips from common appliances like toasters or forcing federal contractors like paper suppliers to take on such a monumental task would not further U.S. national security.

https://finance.yahoo.com/news/u-lawmakers-ease-proposed-curbs-172511413.html