US Senators Moderate Proposed Restrictions Against Use of Chinese Semiconductors

US senators have moderated a proposal for new restrictions on the use of chips made in china by the federal government and its contractors, according to a recent draft seen by Reuters, amid pushback from industry groups including the Chamber of Commerce.

The move is the latest example of the industry’s efforts to weaken proposals aimed at hindering the burgeoning technological sector China, noting that such measures will increase costs.

Senate Democratic leader Chuck Schumer and John Cornyn, known for his tough stance on China, unveiled a measure in September that would have required federal agencies and their contractors to stop using semiconductors made by China’s SMIC, as well as semiconductors manufactured by YMTC and CXMT.

The text of a new version of the measure, dated December 1, no longer prohibits contractors from “using” the specific chips and delays the compliance deadline to 5 years from the immediate or 2-year implementation deadlines, included in the first version.

“This does not clearly prohibit contractors from using already covered semiconductor products,” Robyn Burrows, a federal contracting attorney at Blank Rome, said when asked to read excerpts from the new draft.

Chips manufactured by SMIC are ordered by companies around the world and can be found in products as diverse as mobile phones and cars. They are difficult to identify because they are not usually labeled with the names of the companies that make them.

The measure, which was filed as an amendment to the National Defense Authorization Act (NDAA), drew criticism from the Chamber of Commerce and other industry groups, who said in a letter last month that it would be expensive and difficult for companies to determine whether SMIC made the chips contained in a wide range of electronic products.