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California Democrats fear “death spiral” for US technology companies if China imposes further restrictions
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California Democrats fear “death spiral” for US technology companies if China imposes further restrictions

WASHINGTON (Reuters) – California Democrats are calling on the Biden administration to shelve plans to impose new restrictions on U.S. technology exports to China, arguing that unilateral restrictions would benefit foreign competitors at the expense of American companies.

Washington has imposed a series of restrictions on exports of chips and chipmaking equipment to China in recent years, fearing Beijing could use the technology to bolster its military. The Netherlands and Japan, home to chipmaking equipment makers ASML and Tokyo Electron respectively, have also restricted equipment exports to China, but are not as strict as the U.S.

Reuters reported last month that the Commerce Department is planning a new rule that would expand the U.S.’s power to stop exports of semiconductor manufacturing equipment from certain countries to Chinese chipmakers, but would exclude Japan and the Netherlands.

In an August 13 letter, Senator Alex Padilla and Representative Zoe Lofgren argued that another round of controls could “throw long-established U.S. companies into a death spiral” because U.S. allies have not imposed similarly aggressive export restrictions to China on their own companies.

“We ask that you suspend further unilateral export controls until you have adequately demonstrated that such controls will not harm U.S. competitiveness in advanced semiconductors and semiconductor manufacturing equipment,” said the letter to Alan Estevez, who is responsible for export controls at the U.S. Department of Commerce.

The Commerce Department said it had been contacted by the congressional office and would respond through appropriate channels.

The letter is a sign of growing opposition to Biden’s semiconductor policy among Democrats in California, where LAM, Applied Materials and KLA, the largest U.S. chipmakers, are based.

In April, California’s Democratic governor, Gavin Newsom, and Padilla called on the Biden administration to reverse its decision to eliminate a subsidy program for building and expanding semiconductor research and development facilities that was thought to benefit Applied Materials.

In their August letter, Padilla and Lofgren stressed that they were not asking Biden to roll back restrictions on China. They were simply against introducing rules “with questionable national security benefits” if allies did not go along with it.

“We urge you to use all leverage available to the U.S. government to force our allies to align their export controls with ours,” they wrote.

In June, Reuters reported that Estevez traveled to Japan after meeting with the Dutch government to urge allies to further restrict China’s ability to produce cutting-edge semiconductors.

(Reporting by Alexandra Alper; Editing by Rod Nickel)

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