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Global Times: U.S. Is Tightening Export of Chip Equipment to China

Global Times recently reported that two U.S. chip equipment companies confirmed that the U.S. crackdown on Chinese chips has expanded from 10 nm to 14 nm technologies. In addition, the scope of the new regulations may not be limited to China’s SMIC (Semiconductor Manufacturing International Corporation), but may also include other chip manufacturers investing and operating in China. Analysts expressed the belief that the latest move by the United States to suppress China’s chip industry may try to have a long-term impact on the Chinese chip industry, On the one hand, it will also hurt the interests of American companies. The scope of U.S. export restrictions may include other chip manufacturers operating in China, such as Taiwan’s TSMC. According to people familiar with the matter, in the past two weeks or so, all U.S. equipment makers have received letters from the Commerce Department describing the requirement. A statement released by the U.S. Department of Commerce said that the Biden administration is tightening relevant policies against China, focusing on weakening China’s efforts to produce cutting-edge chips in response to major national security risks facing the United States. In the eyes of the U.S. government, 14nm is a watershed between advanced and backward chip manufacturing processes. Since 14nm and below technologies are considered advanced, the U.S. embargo focuses on chip equipment with 14nm and below capabilities in order to achieve the purpose of containing Chinese chips and their competition. The chip industry is an industry requiring close cooperation among global industries. The suppression of China by the United States will inevitably affect the normal development of the global chip industry.

Source: Global Times, August 1, 2022
https://world.huanqiu.com/article/493RXZYbLEo

China Opposes “Chip 4” Alliance

China has taken multiple actions to oppose the “Chip 4” alliance, an initiative that the U.S. is proposing for four major chip production countries, the U.S., Japan, South Korea, and Taiwan. Beijing is afraid that forming the “Chip 4” alliance will isolate China. Other consequences are implied.

Huanqiu (Global Times) published a commentary on July 20, stating, “(T)he South Korean government and related companies can judge by common sense alone that participating in this matter not only will not have any incremental gains, but will also face the risk of significant damage to their interests. Data shows that last year, South Korea’s semiconductor exports totaled $128 billion, of which 60 percent went to mainland China and Hong Kong. To cut ties with this large market is tantamount to business suicide. The U.S. has handed South Korea a knife and is forcing it to do so.”

On July 25, China’s Ambassador to South Korea Xing Haiming met with Yang Hyang-ja, a South Korean National Assembly member and Chairman of the Special Committee on Strengthening the Competitiveness of the Semiconductor Industry. Xing said, “China is willing to work with South Korea to adhere to the principle of a fair and just market, eliminate external interference, and to strengthen cooperation in semiconductors and other fields .…”

Xing met with South Korean Trade Minister Ahn Duk-geun on the same day.

Huanqiu (Global Times) also published an article on July 28 to suggest that Taiwan should not  join the “Chip 4.” It stated, “Currently, Taiwan’s chip exports to the mainland account for more than 40 percent of its total chip exports. Semiconductors and other electronic and communication products are large commodities. If the TSMC  (Taiwan Semiconductor Manufacturing Company) joins the ‘chip 4’ alliance to exclude the mainland China market, it will undoubtedly cause huge losses to the entire Taiwan economy.”

Sources:
1. Huanqiu (Global Times), July 20, 2022
https://opinion.huanqiu.com/article/48uEl4JUSyX
2. Global Times, July 25, 2022
https://www.globaltimes.cn/page/202207/1271363.shtml
3. Huanqiu (Global Times), July 28, 2022
https://taiwan.huanqiu.com/article/4909A65sqgo

Starting in September, China Will Require a Security Assessment before Data Is Sent Overseas,

According to the Cyberspace Administration of China (CAC), starting in September, an official “security assessment” will be required for data to be sent outside of China. This includes operators who have access to information on over 1 million people or have cumulatively provided information on more than 100,000 people.

The CAC, China’s top cyber regulating agency, announced the Measures on the Security Assessment for Data Export on July 7, 2022. “Data export” refers to the overseas transfer from China of data collected and generated within China, as well as the scenario in which a foreign entity or foreign individual is granted the authority to access any data stored within China.

The Measures prescribe several scenarios in which data processors are required to file an application with the authorities for a security assessment before exporting data. 1) The provision of important data outside the country; 2) Operators of Critical Information Infrastructure (CII); 3) Data processors processing the personal information of more than 1 million individuals; 4) operators that have transferred personal information of a total of 100,000 individuals on a cumulative basis since January 1 of the previous year; 5) operators that have transferred sensitive personal information of a total of 10,000 individuals on a cumulative basis since January 1 of the previous year.

The Measures will come into effect on September 1, 2022. The security assessment result is valid for two years. A data processor is also required to re-submit an application for a government security assessment in certain circumstances, such as where the cross-border data transfer purpose has changed.

Source: Central News Agency (Taiwan), July 8, 2022
https://www.cna.com.tw/news/acn/202207in which080164.aspx

VOA Chinese: Biden’s $1 Billion Airport Renovation Plan Avoids Chinese Products

Voice of America Chinese Edition recently reported that the White House held a briefing not long ago, announcing the Biden administration will propose nearly $1 billion to renovate 85 airports across the United States over the next five years. The plan includes updating equipment such as security checks, baggage handling, and more. A lot of environmental protection and security equipment on the market is made by Chinese companies or in Xinjiang. White House officials told VOA that the supply chain situation has been considered, and equipment made in the United States will be used to ensure U.S. national security. Mitch Landrieu, senior White House adviser and infrastructure project implementation coordinator, said that 5,000 projects are already under construction in this plan, and national security considerations are indeed one of the challenges. President Biden hopes to ensure that all products are Made in the USA. Meanwhile, Brian Deese, Director of the National Economic Council, has been planning for a year, and the White House is satisfied with the results so far. Landrieu said that the Biden administration also adopts the “All Hazards Approach” to ensure that all construction projects are in the national security interests of the United States, including this airport construction plan.

Source: VOA Chinese, July 7, 2022
https://www.voachinese.com/a/us-airport-infrastructure-national-security-china-20220707/6648594.html

Kyodo Chinese: Japan Approved TSMC Plant Construction Plan

Major Japanese news agency Kyodo News recently reported in its Chinese edition that the Japanese government announced, based on the relevant laws,  to support the construction of semiconductor factories in Japan. The global semiconductor giant Taiwan Semiconductor Manufacturing Company (TSMC) and others have been approved to build factories in Kumamoto Prefecture. The Japanese government will give a subsidy of up to 476 billion yen (about US$3.5 billion). TSMC will join hands with the Sony Group and Denso to manufacture mainly in order to supply Japanese customers. The factory is expected to make its first shipments in December 2024. The monthly production capacity of semiconductors in the 10 to 20 nanometer scale will reach about 55,000 pieces. According to the plan, the factory covers an area of about 213,000 square meters and employs about 1,700 people. The government believes that TSMC has met the conditions of continuous production for at least 10 years and supplies more than half of the materials purchased in Japan. The Minister of Economy and Industry said at a press conference that the government looks forward to enhancing the resilience of the semiconductor supply chain.

Source: Kyodo Chinese, June 17, 2022
https://china.kyodonews.net/news/2022/06/4abfb33025f7–4760.html

Lianhe Zaobao: Tencent Plans More Layoffs

Singapore’s primary Chinese language newspaper, Lianhe Zaobao, recently reported that, in the second half of this year, Chinese Internet giant Tencent will continue to lay off staff. All business groups will reduce their staff by at least 10 percent and will start laying off more staff from the management levels. In the first half of this year, Tencent “optimized” the personnel of each business group. In the second half of the year, the whole company will continue to lay off employees on the same basis as in the first half of the year. The proportion of layoffs in the different sub-divisions of the Platform and Content Business Group will even reach 40 to 50 percent. A few business groups will face discontinuation. Tencent’s core business groups, including the WeChat Group and the Gaming Group were not touched much in the first half. However, in this upcoming new round, 10 percent or more will also see layoffs. Tencent is currently at a low point in its performance. According to Tencent’s financial report for the first quarter of this year, Tencent’s adjusted net profit fell by 23 percent year-over-year and its net profit has declined for three consecutive quarters.

Source: Lianhe Zaobao, June 23, 2022
https://www.kzaobao.com/shiju/20220623/119811.html   already

China Further Tightens Online Censorship, Mandating Real Name Commenting

The Cyberspace Administration of China (CAC), recently issued a draft version of the “Internet commenting service management regulations.” The country’s top Internet authority mandates that providers of commenting services shall authenticate the real identity of registered users and shall not provide commenting services to users who have not provided real identity information. The “comment service” refers to the Internet platforms that, by means of posting, reply, messaging and other means, provide users the ability to publish text, symbols, expressions, pictures, audio and video information.

CAC also requires service providers to establish mechanisms to review postings, conduct real-time inspections, and launch emergency responses. The online postings have to be reviewed before being published. Any “illegal and undesirable information” are to be detected, in a timely manner, processed, and reported to the Internet authorities.

CAC also proposed that the service provider establish a user grading system, which conducts a credit assessment of the user’s commenting behavior. Users with serious violations will be blacklisted, deprived of services, and prohibited from re-registering to use commenting services.

Source: Central News Agency (Taiwan), June 18, 2022
https://www.cna.com.tw/news/acn/202206180106.aspx

Nike Announced Ending Its Running App Services in China

Shanghai-based Chinese financial news site East Money recently reported that the Nike Running Club (“NRC”), a running app owned by Nike, issued a notice to users of service suspension. The announcement stated that, due to business plan adjustments, the NRC APP will discontinue its services in China starting July 8, 2022. NRC will provide data export services for runners in need. Garmin’s sports equipment will stop synchronizing data with the NRC APP, effective immediately. Since the APP was launched, more than eight million registered users in China have run more than 100 million kilometers together. The Paper advised that, in late May, some runners also reported that the NRC APP displayed a notice on the relevant page that the service would be suspended, informing that the operation in the area where the runners were located would be stopped on June 30. Some Chinese netizens lamented that many foreign brands have withdrawn from China recently, such as Amazon Kindle and Airbnb.

Source: East Money, June 8, 2022
http://finance.eastmoney.com/a/202206082405491532.html