US effort to curb China's and Russia's access to advanced computer chips 'inadequate,' report finds

[December 19, 2024]  By AAMER MADHANI and JOSH BOAK

WASHINGTON (AP) — The Commerce Department's efforts to curb China's and Russia's access to American-made advanced computer chips have been “inadequate” and will need more funding to stymie their ability to manufacture advanced weapons, according to a report published Wednesday by the Senate's Permanent Subcommittee on Investigations.

The Biden administration imposed export controls to limit the ability of China and Russia to access U.S.-made chips after Russia's invasion of Ukraine nearly three years ago.

The agency's Bureau of Industry and Security, according to the report, does not have the resources to enforce export controls and has been too reliant on U.S. chip makers voluntarily complying with the rules.

But the push for bolstering Commerce's export control enforcement comes as the incoming Trump administration says it is looking to dramatically reduce the size and scope of federal government. President-elect Donald Trump has tapped entrepreneurs Elon Musk and Vivek Ramaswamy to lead a new “Department of Government Efficiency” to dismantle parts of the federal government.

The Trump transition team did not immediately respond to a request for comment on the report.

BIS’s budget, about $191 million, has remained essentially flat since 2010 when adjusted for inflation.

“While BIS’ budget has been stagnant for a decade, the bureau works diligently around the clock to meet its mission and safeguard U.S. national security,” Commerce Department spokesperson Charlie Andrews said in a statement in response to the report.

Andrews added that with “necessary resources from Congress” the agency would be "better equipped to address the challenges that come with our evolving national security environment.”

In a letter to Commerce Secretary Gina Raimondo on Wednesday, Democratic Sen. Richard Blumenthal of Connecticut, chair of the subcommittee, pointed to news reports of the Russian military continuing to acquire components from Texas Instruments through front companies in Hong Kong to illustrate how the export controls are failing as an effective tool.

Blumenthal in a statement called on “Commerce to take immediate action and crack down on the companies allowing U.S.-made semiconductors to power Russian weapons and Chinese ambition.”

Texas Instruments said it opposes the use of its chips in Russian military equipment and the illicit diversion of its products to Russia.

Sen. Richard Blumenthal, D-Conn., speaks during a news conference on Capitol Hill, Feb. 1, 2022, in Washington. (AP Photo/Evan Vucci, File)

“It is our policy to comply with export control laws, and any shipments of TI chips into Russia are illicit and unauthorized,” the company said in a statement. “If we find evidence indicating product diversion, we investigate and take action.”

It's not just Texas Instruments that's the issue. The subcommittee in September published a report that found aggregated exports from four major U.S. advanced chip manufacturers nearly doubled from 2021 to 2022 to Armenia and Georgia.

Both of those countries are home to front companies known to assist Russia in acquiring advanced chips made in the U.S. despite export controls.

China, meanwhile, has created “vast, barely disguised smuggling networks which enable it to continue to harness U.S. technology,” the subcommittee report asserts.

Washington has been gradually expanding the number of companies affected by such export controls in China, as President Joe Biden’s administration has encouraged an expansion of investments in and manufacturing of chips in the U.S.

But Chinese companies have found ways to evade export controls in part because of a lack of China subject matter experts and Chinese speakers assigned to Commerce's export control enforcement.

The agency's current budget limits the number of international end-use checks, or physical verification overseas of distributors or companies receiving American-made chips that are the supposed end users of products. Currently, Commerce has only 11 export control officers spread around the globe to conduct such checks, the report said.

The committee made several recommendations in its report, including Congress allocating more money for hiring additional personnel to enforce export controls, imposing larger fines on companies that violate controls and requiring periodic reviews of advanced chip companies’ export control plans by outside entities.
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Boak reported from West Palm Beach, Florida.

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