The United States Senate Permanent Investigation Subcommittee released a report on Wednesday (December 18), stating that the efforts of the U.S. Department of Commerce to restrict China and Russia from accessing advanced chips manufactured in the U.S. are insufficient and more funding is needed to prevent China and Russia from enhancing their capabilities in manufacturing advanced weapons.
Since Russia’s invasion of Ukraine, the Biden administration has implemented export controls to limit China and Russia’s access to U.S.-manufactured chips.
The report mentioned that the Bureau of Industry and Security (BIS) within the Department of Commerce lacks resources to enforce export controls and relies too heavily on voluntary compliance from U.S. chip manufacturers.
The annual budget of BIS is approximately $191 million, which has remained relatively flat since 2010 after adjusting for inflation.
Charlie Andrews, a spokesperson for the Department of Commerce, responded to the report by stating, “While BIS’s budget has been stagnant for a decade, the bureau works around the clock to fulfill its mission and protect U.S. national security.”
He added that with the “necessary resources provided by Congress,” the bureau will be able to “better address the challenges posed by our ever-changing national security environment.”
The chairman of the subcommittee, Democratic Senator Richard Blumenthal, pointed out in a letter to Commerce Secretary Gina Raimondo that an audit of Texas Instruments revealed that the Russian military continues to procure components from Texas Instruments through a subsidiary in Hong Kong, indicating that export controls as a tool have been ineffective.
He stated that the subcommittee’s investigation results show that Texas Instruments “missed clear warning signals,” with three companies in its distribution chain consistently transferring products to Russia.
He wrote, “While Congress must provide BIS with more resources to fulfill its critical mission, BIS should have long ago fully utilized the enforcement authority granted by Congress to take aggressive action to cut off American semiconductors flowing into Russia’s war machine.”
Beyond Texas Instruments, the report also found that from 2021 to 2022, the total exports of advanced chips from the four major U.S. chip manufacturers to Armenia and Georgia nearly doubled.
Both countries serve as locations for front companies, which assist Russia in obtaining U.S.-manufactured advanced chips despite export controls.
Additionally, the report indicated that China has established a “massive, nearly unbridled smuggling network that allows it to continue to exploit U.S. technology.”
As the Biden administration encourages expanding investments and chip manufacturing in the U.S., Washington has been gradually increasing the number of Chinese companies under control.
However, Chinese companies have found ways to evade export controls, partly due to the Department of Commerce lacking Chinese experts and Chinese-speaking personnel responsible for enforcing export controls.
The current budget of BIS limits the number of overseas physical inspections of distributors or companies that receive U.S.-manufactured chips, considered to be the end users of the products. Currently, the Department of Commerce only has 11 export control officers deployed globally to conduct such inspections.
The subcommittee presented several recommendations in the report, including appropriating more funding to hire additional staff for enforcing export controls, imposing higher fines on companies that violate regulations, and requiring external entities to regularly review the export control plans of advanced chip companies.