Exclusive-Latest US strike on China's chips hits semiconductor toolmakers

 The U.S. will launch its third crackdown in three years on China's semiconductor industry on Monday

FILE PHOTO: Flags of China and U.S. are displayed on a printed circuit board with semiconductor chips, in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration/File Photo© Thomson Reuters

By Karen Freifeld and David Shepardson  02 Dec 2024

(Reuters) - The U.S. will launch its third crackdown in three years on China's semiconductor industry on Monday, restricting exports to 140 companies including chip equipment maker Naura Technology Group, among other moves, according to two people familiar with the matter.

The effort to hobble Beijing's chipmaking ambitions will also hit Chinese chip toolmakers Piotech and SiCarrier Technology with new export restrictions as part of the package, which also takes aim at shipments of advanced memory chips and more chipmaking tools to China.

The move marks one of the Biden Administration's last large scale effort to stymy China's ability to access and produce chips that can help advance artificial intelligence for military applications or otherwise threaten U.S. national security.

It comes just weeks before the swearing in of Republican former president Donald Trump, who is expected to keep in place many of Biden's tough-on-China measures.

The package includes curbs on China-bound shipments of high bandwidth memory (HBM) chips, which are critical for high-end applications like AI training; new curbs on 24 additional chipmaking tools and three software tools; and new export restrictions on chipmaking equipment manufactured in countries including Singapore and Malaysia.

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The tool controls will likely hurt Lam Research, KLA and Applied Materials, as well as non-U.S. companies like Dutch equipment maker ASM International.

Among Chinese companies facing new restrictions are nearly two dozen semiconductor companies, two investment companies and over 100 chipmaking tool makers, the sources said. U.S. lawmakers say some of the companies, including Swaysure Technology Co, Qingdao SiEn, and Shenzhen Pensun Technology Co, work with China's Huawei Technologies, the telecommunications equipment leader once hobbled by U.S. sanctions and now at the center of China's advanced chip production and development.

They will be added to the entity list, which bars U.S. suppliers from shipping to them without first receiving a special license. China has stepped up its drive to become self-sufficient in the semiconductor sector in recent years, as the U.S. and other countries have restricted exports of the advanced chips and the tools to make them. However, it remains years behind chip industry leaders like Nvidia in AI chips and chip equipment maker ASML in the Netherlands.

The U.S. also is poised to place additional restrictions on Semiconductor Manufacturing International, China's largest contract chip manufacturer, which was placed on the Entity List in 2020 but with a policy that allowed billions of dollars worth of licenses to ship goods to it to be granted.

For the first time, the U.S. will add two companies that make investments in chips to the entity list. Chinese private equity firm Wise Road Capital and tech firm Wingtech Technology Co will be added.

Companies seeking licenses to ship to firms on the Entity List generally get denied.

DUTCH AND JAPANESE EXEMPTED

An aspect of the new package that addresses the foreign direct product rule could hurt some U.S. allies by limiting what their companies can ship to China. The new rule will expand U.S. powers to curb exports of chipmaking equipment by U.S., Japanese, and Dutch manufacturers made in other parts of the world to certain chip plants in China.

Equipment made in Malaysia, Singapore, Israel, Taiwan and South Korea is subject to the rule while the Netherlands and Japan will be exempt. The expanded foreign direct product rule will apply to 16 companies on the entity list that are seen as the most important to China's most advanced chipmaking ambitions.

The rule will also lower to zero the amount of U.S. content that determines when certain foreign items are subject to U.S. control. That will allow the U.S. to regulate any item shipped to China from overseas if it contains any U.S. chips.

The new rules are being released after lengthy discussions with Japan and the Netherlands, which, along with the U.S., dominate the production of advanced chipmaking equipment. The U.S. plans to exempt countries that put in place similar controls, the people said.

Another rule in the package restricts memory used in AI chips that correspond with what is known as "HBM 2" and higher, technology made by South Korea's Samsung and SK Hynix and U.S.-based Micron. Industry sources only expect Samsung Electronics to be impacted. The latest rules are the third major package of chip-related export restrictions on China implemented under the Biden administration. In October 2022, the U.S. published a sweeping set of controls to curb the sale and manufacture of certain high-end chips which were considered to be the biggest shift in U.S. tech policy toward China since the 1990s.

(Reporting by Karen Freifeld and David Shepardson; Additional reporting by Brenda Goh; Editing by Chris Sanders, Alexandra Alper and Sonali Paul)

Exclusive-Latest US strike on China's chips hits semiconductor toolmakers

Exclusive: Beijing pushes for toning down of China risks in IPO prospectuses

 July 24 (Reuters) - Beijing has asked law firms to tone down the language used to describe China-related business risks in Chinese companies' offshore listing documents, warning failure to do so could cost them regulatory green light for the IPOs, three people familiar with the matter said.

The move, which not been reported before, is the latest in tightening scrutiny of Chinese companies' offshore listings, and comes at a time when Beijing is stepping up controls over cross-border transfer of sensitive information.

By Julie Zhu, Kane Wu and Selena Li

July 24, 202311:45 PM GMT+8Updated 3 months ago

A Chinese national flag flutters outside the China Securities Regulatory Commission (CSRC) building on the Financial Street in Beijing, China July 9, 2021. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights

The China Securities Regulatory Commission (CSRC) on July 20 met with local lawyers and asked them to refrain from including negative descriptions of China's policies or its business and legal environment in companies' listing prospectuses, the people said.

The closed-door meeting followed informal, so-called window guidance the regulator had offered on the subject to firms that work on listing applications over the past few months, the three sources said.

A spokesperson for the U.S. Securities and Exchange Commission (SEC) declined to comment.

Last week, the securities regulator said it had directed to Chinese companies listed on U.S. stock exchanges to disclose more details about the role of the Chinese government in their operations and the impact of a 2021 law banning the import of goods from China's Uyghur region.

The letter is part of the SEC's effort to implement a 2020 law that increases scrutiny of U.S.-listed Chinese companies.

Chinese companies planning overseas share offerings would typically list changes in China's changing economic, political and social conditions as well as changes in government policies and regulations and trade tensions with the United States among business risks, their public disclosures showed.

The Chinese law firms acting as IPO advisors have been asked to drop such boilerplate risk disclosures, said one of the people, who declined to be identified as the discussions were confidential.

The latest guidance could force Chinese companies to delay or even put on hold their share offerings in the United States, since regulators there require full risk disclosure, two of the people said.

China's new offshore listing rules that came into effect on March 31 forbid any comments in the listing documents that "misrepresent or disparage laws and policies, business environment and judicial situation" of China.

However, the rules do not specify what would qualify as such comments.

All major markets require issuers to disclose to prospective investors risks related to the company itself, its business sector, and the country where it is headquartered in.

The China-specific risk statements in prospectuses prepared after March 31 caught the attention of some senior leaders in Beijing, prompting the CSRC to reiterate its stance on the subject to dealmakers, one of the sources said.

CSRC told law firms at the meeting last week not to sign off any offshore share offering disclosures, which included statements that distorted or derogated China's laws, policies and regulatory environment, according to the three sources.

The CSRC did not immediately respond to a faxed request for comment.

RISK DISCLOSURES

In its earlier "window guidance" to dealmakers, the regulator hinted that failure to comply with it might cost them and issuers a regulatory green light for listings, two of the sources said.

Representatives from the CSRC's International Cooperation Department, more than 10 Chinese law firms and other government and industry bodies attended the July 20th meeting, according to one of the people.

Large domestic law firms Fangda Partners, Han Kun Law Offices, and Zhong Lun Law Firm were among the attendees, said two of the sources.

Fangda, Han Kun and Zhong Lun did not respond to Reuters' request for comment.

The latest steps come as Beijing is scrambling to revive the world's second-largest economy that has started to rapidly lose momentum in recent months following the initial post-COVID bounce.

Many foreign companies have also expressed concerns over the changing business environment, which in recent years has been marked by a crackdown on technology firms and consultancies, as well as new anti-espionage and data security laws.

The new rules on overseas listings and data transfers have already made it harder to secure timely approvals and led to calls for Beijing to reconsider its approach.

Reporting by Julie Zhu, Kane Wu and Selena Li; Additional reporting by Michelle Price and Chris Prentice Editing by Sumeet Chatterjee and Tomasz Janowski

Exclusive: Beijing pushes for toning down of China risks in IPO prospectuses | Reuters

Ex-Harvard professor sentenced to 6 months house arrest for lying about China ties

 WASHINGTON, April 26 (Reuters) - A former Harvard University professor was sentenced on Wednesday to six months' house arrest for lying about his ties to a China-run recruitment program, prosecutors said, in one of the highest-profile cases resulting from a crackdown on Chinese influence on U.S. research.

April 27, 202312:41 AM GMT+8Last Updated 3 days ago

 Harvard University nanotechnology professor Charles Lieber, who is charged with lying to U.S. authorities about his ties to a China-run recruitment program and funding he allegedly received from the Chinese government for research, arrives at the federal courthouse in Boston, Massachusetts, U.S., December 14, 2021. REUTERS/Brian Snyder

chichCharles Lieber, a renowned nanoscientist and the former chairman of Harvard's chemistry department, was spared additional prison time in the sentence announced by U.S. District Judge Rya Zobel in Boston following his conviction in December 2021.

Lieber was sentenced to two days in prison - time that he had already served following his arrest - and half a year of house arrest with a fine of $50,000, prosecutors said.

He was also sentenced to two years of supervised release and a restitution to the Internal Revenue Service of $33,600, according to prosecutors.

Lieber, who has been battling cancer, denies wrongdoing.

Charles Lieber leaves federal court after he and two Chinese nationals were charged with lying about their alleged links to the Chinese government, in Boston, Massachusetts, U.S. January 30, 2020. REUTERS/Katherine Taylor/File Photo

 

A federal jury had found him guilty of making false statements to authorities, filing false tax returns and failing to report a Chinese bank account in a case spilling out of the U.S. Department of Justice's "China Initiative."

The conviction had marked a key victory for prosecutors pursuing cases arising from the troubled initiative, which was launched in 2018 during Republican then-President Donald Trump's administration to counter suspected Chinese economic espionage and research theft.

The Justice Department under Democratic President Joe Biden in February 2022 ended the China initiative following several failed prosecutions and criticism that it chilled research and fueled bias against Asians, though it said it would continue pursuing cases over national security threats posed by China.

The failed cases included another one in Boston in which prosecutors in January 2022 dropped charges against Massachusetts Institute of Technology professor Gang Chen for concealing his ties to China when seeking grant money.

Prosecutors alleged that Lieber, in his quest for a Nobel Prize, agreed in 2011 to become a "strategic scientist" at Wuhan University of Technology in China and through it participated in a Chinese recruitment drive called the Thousand Talents Program.

China used that program to recruit foreign researchers to share their knowledge with the country. Participation is not a crime, but prosecutors contended Lieber lied about his role in the program in response to inquiries from the U.S. Defense Department and the U.S. National Institutes of Health, which had awarded him $15 million in research grants.

The Wuhan university agreed to pay him up to $50,000 per month plus $158,000 in living expenses, and he was paid in cash and deposits to a Chinese bank account, prosecutors said.

Prosecutors said Lieber failed to report his salary on his 2013 and 2014 income tax returns and for two years failed to report the bank account.
Reporting by Kanishka Singh in Washington

Our Standards: The Thomson Reuters Trust Principles.

https://www.reuters.com/world/ex-harvard-professor-sentenced-6-months-house-arrest-lying-about-china-ties-2023-04-26/

Paris, Kyiv, Baltic states dismayed after China envoy questions Ukraine sovereignty

 PARIS, April 23 (Reuters) - France, Ukraine and the Baltic states of Estonia, Latvia and Lithuania expressed dismay after China's ambassador in Paris questioned the sovereignty of former Soviet countries like Ukraine.

Reporting by John Irish and Ryan Woo, Writing by Juliette Jabkhiro, Editing by Hugh Lawson

April 23, 2023

A cargo ship sails next to the Crimea bridge in the Kerch Strait, Crimea, March 14, 2023. REUTERS/Alexey Pavlishak

Asked about his position on whether Crimea is part of Ukraine or not, Chinese ambassador Lu Shaye said in an interview aired on French television on Friday that historically it was part of Russia and had been offered to Ukraine by former Soviet leader Nikita Khrushchev.

“These ex-USSR countries don’t have actual status in international law because there is no international agreement to materialize their sovereign status," Shaye added.

France responded on Sunday by stating its “full solidarity" with all the allied countries affected, which it said had acquired their independence “after decades of oppression".

“On Ukraine specifically, it was internationally recognized within borders including Crimea in 1991 by the entire international community, including China," a foreign ministry spokesperson said.

The spokesperson added that China will have to clarify whether these comments reflect its position or not.

The three Baltic states and Ukraine, all formerly part of the Soviet Union, reacted along the same lines as France.

“It is strange to hear an absurd version of the ‘history of Crimea’ from a representative of a country that is scrupulous about its thousand-year history," Mykhailo Podolyak, a senior Ukrainian presidential aide, wrote on Twitter.

“If you want to be a major political player, do not parrot the propaganda of Russian outsiders."

https://www.news18.com/world/paris-kyiv-baltic-states-dismayed-after-china-envoy-questions-ukraine-sovereignty-7618873.html

Both sides of the Taiwan Strait belong to China, says foreign minister

 Qin Gang says it is therefore right and proper for them to uphold their sovereignty.

Reuters - 21 Apr 2023, 11:35am

Chinese foreign minister Qin Gang warned that those who ‘play with fire’ on Taiwan will eventually get themselves burned. (AP pic)

SHANGHAI: China’s foreign minister Qin Gang said today that both sides of the Taiwan Strait belong to China, and that it is right and proper for China to uphold its sovereignty.

Qin made the remarks at the Lanting Forum in Shanghai, where he discussed a wide range of topics from debt, the global economy and Taiwan.

“Recently there has been absurd rhetoric accusing China of upending the status quo, disrupting peace and stability across the Taiwan Strait,” Qin said. “The logic is absurd and the conclusion dangerous.”

He added that “fair-minded people can see who is engaged in hegemonic bullying and high-minded practices.”

“It is not the Chinese mainland, but the Taiwan independence separatist forces and a handful of countries attempting to disrupt the status quo,” Qin said. “Those who play with fire on Taiwan will eventually get themselves burned.”

China recently held military exercises around the self-ruled island after Taiwan’s president, Tsai Ing-wen, returned to Taipei following a meeting in Los Angeles with US House of Representatives Speaker Kevin McCarthy.

Beijing views democratically governed Taiwan as its own territory, a claim the government in Taipei strongly rejects, and routinely denounces high-level meetings between Taiwanese and foreign leaders and officials.

https://www.freemalaysiatoday.com/category/world/2023/04/21/both-sides-of-the-taiwan-strait-belong-to-china-says-foreign-minister/

UK warns China against intimidating foreign nationals on British soil

 Britain said on Wednesday that any intimidation on British soil of foreign nationals by China or other states was unacceptable and that it was investigating the matter, responding to a media report about a so-called secret Chinese police station.

Reuters

19 April, 2023, 08:15 pm

Last modified: 19 April, 2023, 08:40 pm

A worker adjusts British and China (R) national flags on display for a signing ceremony at the seventh UK-China Economic and Financial Dialogue "Roundtable on Public-Private Partnerships" at Diaoyutai State Guesthouse in Beijing, China September 21, 2015. REUTERS/Andy Wong/File Photo

Britain has previously said that reports of undeclared police stations in the country were "extremely concerning," and that the police were looking into the issue.

Earlier this week, US federal agents arrested two New York residents for allegedly operating a Chinese "secret police station" in the Chinatown district of Manhattan. China said it firmly opposed what it called "the US's slanders and smears."

On Wednesday, Britain's policing minister Chris Philp said the government was aware of about 100 such stations around the world.

"This government takes interference with foreign nationals here, transnational intimidation, extremely seriously. It is completely unacceptable and we will do whatever is necessary to stop it from happening," he said.

China's embassy in Britain did not immediately respond to a Reuters' request for a comment.

The Chinese government has previously said there are centres outside China run by local volunteers, not Chinese police officers, that aim to help Chinese citizens renew documents and offer other services.

The Times reported on Tuesday that a Chinese businessman linked to what it called a secret police station in London had organised fundraising dinners for the governing Conservative Party.

The local Conservative Party association concerned said it had reported the matter to the security services last year and the man was no longer a member of their association.

Philp declined to comment on the case, which he said was under police investigation.

On the issue of possible political influence, he said: "All political parties need to be alert to the danger that representatives of hostile states seek to infiltrate or influence our activities"

https://www.tbsnews.net/worldbiz/politics/uk-warns-china-against-intimidating-foreign-nationals-british-soil-619490

Vietnam sends ship to track Chinese vessel patrolling Russian gas field in EEZ -data

 

HANOI, March 27 (Reuters) - A Vietnamese ship monitored a Chinese Coast Guard vessel on Saturday in a Russian-operated gas field in Vietnam's South China Sea exclusive economic zone (EEZ), data show - the latest Chinese patrol in a pattern stretching more than a year.

Francesco Guarascio

March 27, 2023·4 min read

Chinese coast guard ships have sailed directly into energy exploration blocks operated or owned by Russian firms in Vietnam's EEZ about 40 times since January 2022, according to vessel-tracking data from Vietnamese research organisation South China Sea Chronicle Initiative (SCSCI), an independent non-profit.

China considers the area part of its expansive territorial claim in the South China Sea marked by a "nine-dash line," a boundary the Permanent Court of Arbitration found in 2016 to have no legal basis. It has built artificial islands and airfields on some reefs and islets in the sea to widespread concern in the region and in the United States.

Both Vietnam and Indonesia have asked China to avoid these areas in their EEZs - although the zones are not territorial waters and do not have sailing restrictions under international law. The patrols mirror Chinese Coast Guard activity elsewhere in the South China Sea, where such vessels have been used to assert territorial claims.

"China is asserting jurisdictional rights to seabed energy resources and (has) used its coast guard to put pressure on regional states," said Ian Storey, a senior fellow at Singapore's ISEAS-Yusof Ishak Institute.

Maps created by SCSCI and analysed by Reuters, using Automatic Identification System (AIS) signals from those vessels, show Chinese ships last year followed nearly identical routes at least 34 times from Vanguard Bank, a submerged feature near the boundaries of Vietnamese and Indonesian exclusive economic zones (EEZs), to two Russian-controlled blocks 50 nautical miles (92 kilometres) away - at times getting close as 1 nautical mile from the main wells.

Russia's state-controlled Zarubezhneft is the operator and a shareholder of one the two blocks, 06-01; Russia's gas giant Gazprom is a shareholder in the other, 05-03, which is operated by a subsidiary of PetroVietnam, the country's state-owned fossil fuel company, according to the Center for Strategic and International Studies (CSIS), a think tank in Washington.

The Chinese ship on Saturday sailed through both blocks, data show, as well as two others. The Vietnamese ship Kiem Ngu 278, operated by a fisheries law enforcement agency, followed the vessel, data show, at times closing to distances of just a few hundred metres.

From those blocks, roughly 630 nautical miles from China's Hainan island, the Chinese ships typically return on a direct route to Vanguard Bank, where they are stationed, data reviewed by Reuters show. The Chinese ship on Saturday instead sailed to Malaysia's EEZ.

A spokesperson for China's foreign ministry said the Chinese Coast Guard carries out patrols in the areas under China's jurisdiction in the South China Sea while respecting international law, and said it was not aware of patrols in energy exploration blocks operated by Russian firms.

A spokeswoman for Vietnam's foreign ministry said on Friday that Vietnam acts in the South China Sea “to protect its legal rights”.

Zarubezhneft, Gazprom, and Russia's foreign ministry and embassy in Hanoi did not respond to requests for comment.

Exclusive economic zones generally extend 200 nautical miles (370km) beyond its shores. By international law, a country's territorial waters - in which it can control all activities - typically extend about 12 nautical miles from its shores. Conflicts can arise where such claims overlap.

Malaysia, the Philippines, Taiwan and Brunei are among other countries that have competing claims in the South China Sea.

The gas-rich fields exploited by the Russian companies are among the furthest from Vietnam's coast and are close to the strategic boundary with Indonesia's EEZ, and to blocks claimed by China.

Since at least November, the Chinese Coast Guard ships have also expanded their routes, moving through block 12-11, which is jointly operated by Zarubezhneft and PetroVietnam, on their way to oil and gas field 12W, explored by Britain's Harbour Energy , SCSCI data show.

The patrols of the area operated by Harbour Energy started just before Indonesia and Vietnam signed an agreement in December 2022 setting their EEZs' boundaries in the South China Sea, which paved the way for gas deals.

Harbour Energy declined to comment.

Harbour Energy and Zarubezhneft are developing the nearby Tuna gas field in Indonesia's EEZ, from which Jakarta plans to export gas to Vietnam via a pipeline starting in 2026. The project is currently suspended because of Western Ukraine-related sanctions on some of the companies involved.

Chinese Coast Guard vessels have also patrolled the Tuna block; in January, Indonesia deployed a warship to monitor a Chinese ship there.

(Reporting by Francesco Guarascio; additional reporting by Laurie Chen and Joe Cash in Beijing, and Guy Faulconbridge in Moscow. Editing by Gerry Doyle)

https://finance.yahoo.com/news/vietnam-sends-ship-track-chinese-071908536.html