Think Tank Scholar Asks If October Chip Controls Will Kneecap US Firms

A former undersecretary of Commerce now at the Center for Strategic and International Studies, Bill Reinsch, said there has been relatively little impact on chip companies and chipmaking equipment companies from export controls on sales to China announced last October (see 2210070049).

But Reinsch said it's "too soon to say" if the export controls will lead to lower revenue, and therefore, less money to invest in product development at these firms. If it does, he said, the U.S. could be "kneecapping our own guys."

Reinsch said that before this move by the Biden administration, the Bureau of Industry and Security tended to adjust what was restricted as technology advanced, so that when what was once cutting-edge became a commodity, it could again be sold more widely. If you don't do that, over time, more and more products are controlled, and "that’s going to have a larger and larger impact on revenue," he said.

Because of a law restricting sales of commercial satellite components, the U.S. market share went from 75% globally in the late 1990s to 25% by 2005, he said. "I don't know if that will happen in this case, but it's something to watch," Reinsch said during a webinar hosted Jan. 27 by the Massachusetts Export Center Expo.

Reinsch said he isn't sure if Japanese and Dutch chipmaking equipment manufacturers will agree to the same restrictions imposed on U.S. firms, but he said he thinks there may be an agreement before long. "It sounds like the relevant companies are getting resigned to it," he said.