US Senators call for Biden to shut down a chip center located in China

A group of Republican Senators want to shut down a chip center to snub Huawei but have failed at every turn to keep the telecom giant down

A group of US Senators – Marsha Blackburn, Tom Cotton, Bill Hagerty, Ted Cruz and Marco Rubio – all sent an open letter to President Joe Biden on Monday asking for his administration to “act quickly to prevent Huawei from building the Pengxinwei IC Manufacturing Company (PXW) semiconductor plant.”

As they say in the letter, “the opening of this plant would put the United States at a disadvantage in countering Huawei, advance Communist China’s Military-Civil Fusion campaign, put American semiconductor companies at a disadvantage, and pose a national security concern.”

More specifically, citing a Bloomberg report, the letter says, “Huawei began construction over seven months ago on a factory where PXW is expected to eventually mass produce chips as advanced as 14 nanometers and 7 nanometers.” This would, as they say, “represent a dangerous leap in Chinese semiconductor manufacturing, as Chinese chipmakers have thus far only been able to produce 7-nanometer chips in limited quantities.” 

With this new technology in hand, “Huawei could resume its march towards 5G market dominance, and the CCP will advance its plan to control global telecommunications and extend its economic espionage and repression.”

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From the framing of this letter, one would think that it's being built right under the American government’s nose in the middle of Texas or in Washington, DC. But no, it’s actually being built… in Shenzhen, a city in China’s Pearl River Delta. Given this, it would seem that there’s not much these senators could do (besides sending a strongly worded letter) to shut the facility down. 

Still, they do give some specific points about what could be done. The senators denounced Biden’s lack of effort or enthusiasm in combating the construction of the facility, noting that the Department of Commerce could add PXW to its Bureau of Industry and Security’s (BIS) Entity List or its list of Huawei subsidiaries under the Foreign Direct Product Rule. This would allow the administration to halt shipments to and transactions with the facility, effectively sanctioning it and setting it back in terms of its access to resources and investments.

But that’s as far as it goes. As Huawei has demonstrated already, it can succeed despite US sanctions – not only in terms of its own research and development but in terms of being a viable business. The Shenzhen-based telecom giant, whose name literally translates from Mandarin to “China has promise,” is a symbol of Beijing’s meteoric rise over the years from a relatively poor country to the world’s second-largest economy in terms of nominal gross domestic product and a center of innovation. 

In 2021, despite US sanctions, the company reported an overall decline in sales but had record profits. In fact, all told the company said in March that its net profits surged 75.9% year-on-year despite baseless claims of “security concerns” circulated by US intelligence agencies and media in virtually every country where Huawei conducts business.

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And not only this, Huawei is finding workarounds for US sanctions. That’s evidenced by Washington-imposed sanctions centered around semiconductors and losing access to, for example, the Android operating system. That prompted the company to develop its own in-house HarmonyOS, which is now the world’s fastest-growing mobile device operating system. (I pointed this development out at the time as a major symbol of the success of China’s reform and opening-up policies and I stand by that today). 

So, with all of this in mind, the chances of the Department of Commerce being able to shut down a Chinese manufacturing plant within China are less than slim. It is impossible.

The only thing the US side could do, in reality, to halt the development of this plant would be to drop a tactical nuclear bomb on it and watch it – and what remains of any shred of American credibility on free trade, intellectual property rights and pretty much any issue you wish to point to – blow into smithereens. Anything short of that is basically just grandstanding.

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