The US government has announced that it will introduce more bans on Chinese companies while simultaneously tightening pre-existing regulations due to loopholes. What restrictions are being implemented, why is the United States targeting China, and how will it influence the electronic engineering sector?

The US introduces tighter regulation and more bans against Chinese companies

Recently, the US announced that it will be looking to tighten regulation after it has been revealed that many manufacturers and exporters have continued selling equipment and part to blacklisted Chinese companies by exploiting loopholes in the regulations. Furthermore, the US will also be adding more companies to the economic blacklist to prevent those companies from operating with US customers and prevent US investors from investing in those companies.

Companies like SMIC are already blacklisted after suspected ties with the Chinese military. This link saw SMIC being blacklisted from accessing the technology needed to create sub-10nm chips. However, the legislation surrounding the sale of such equipment stated that equipment that is “uniquely required” for 10nm was not allowed, so manufacturers have gotten around this rule by obtaining equipment that can be used for a wide range of process nodes, including 10nm.

In response to this loophole, the Defence Department will be looking to introduce new wording that will specifically mention that any technology with 14nm and lower capability will not be allowed for export. Companies whose technology is being used in military applications and/or for the suppression of human rights will also be blacklisted, including DJI (drones) and SenseTime (face recognition).

On top of the increasing regulation and blacklisting, the US is also looking to introduce legislation that outlaw imports from China produced using forced labour. This is increasingly becoming an area of concern after drone images of detention centres with primarily Uyghur minorities was discovered.

Why is the US taking such action against China?

China has always played a backseat in international affairs while being the world’s largest goods manufacturer. Despite being a communist nation, the western world saw great opportunity in China. Over the past several decades, trade with China has helped push it towards a more capitalist society. It could even be speculated that the US allowed China to steal intellectual property and violate copyright laws because China becoming capitalist would work to the benefit of the US in the long term; a small price to pay for a free country with a population of over 1 billion.

However, the past decade has seen growing government oversight and control in the lives of Chinese citizens. Exactly why this has taken place is unclear (this could be the desire to be a “great leader” by President Xi Jinping), but the technology being developed in China and how it is being used as the West worried.

For example, using a social credit system in China where citizens are scored based on how loyal a citizen is to the communist party creates a population that cannot even stand against their own government. For this system to work, the Chinese government needs a database on every individual citizen and pictures of their face. This is then combined with advanced facial recognition AI systems that automatically identify individuals in the street and monitor their behaviour.

This development of AI sanctioned by the government in an application that would otherwise never be used in the western world has given China a massive advantage in AI development. The West is worried because AI is likely to be the key to future warfare and defence in real and cyber worlds.

But it is not just AI development that has the US worried; China is looking to become independent from the rest of the world regarding technology. Currently, China is dependent on outside nations for the most advanced processors and technology as it lacks the ability to create advanced semiconductors. Such semiconductors are essential for AI, and thus China having easy access to cutting-edge hardware would allow it to rapidly develop its software.

Considering that China has been at the centre of many cyberattacks worldwide, has been accused of profiting from forced labour, and is making threats against Taiwan, it quickly becomes clear why the US is looking to push back against the growing influence of China.

How will these regulations affect engineers?

Politics and foreign relations rarely come up when designing a PCB or programming firmware. Still, the truth is that politics and foreign relations can very easily affect our designs.

China is critical in the supply chain of modern electronics as most electronic components are manufactured in China. Sure, advanced processors and microcontrollers may be supplied by companies such as TSMC or Samsung, but the PCB, resistors, capacitors, and many other semiconductors will undoubtedly use China at some point in their production.

As more Chinese companies become blacklisted, engineers may find it harder to source semiconductors from major companies such as SMIC. While these companies may or may not be working with their government’s military, they produce a wide range of non-military components, including regulators, timers, logic, and controllers.

The blacklisting of Chinese companies goes both ways, and many US firms may find themselves unable to trade with those companies. It won’t just be semiconductor equipment providers struggling, but it could also be those who sell chips, semiconductor designs, and services. Even companies that need AI solutions may not be allowed to use algorithms created by Chinese firms due to their potentially immoral data models used for training.