The House Appropriations Commerce, Justice and Science (CJS) and Labor, Health and Human Services, Education and Related Agencies (LHHS) subcommittees advanced their FY 2024 spending bills Friday with proposals to significantly cut annual funding to NTIA and other tech-related Commerce Department agencies and end CPB’s traditional “two-year advance funding status” (see 2307130069). The subpanels advanced their respective bills on voice votes that belied vocal Democratic opposition to the proposed cuts that are expected to reappear when the full Appropriations Committee considers the measures.
The Commerce Department Bureau of Industry and Security is “aware of” reports Huawei is attempting to circumvent U.S. restrictions on semiconductor exports to the company by providing money for Chinese startup Pengxinwei (PXW) IC Manufacturing to build a chip manufacturing plant in Shenzhen that’s expected to largely distribute its products to Huawei, a department official said Tuesday. Senate Intelligence Committee Vice Chairman Marco Rubio of Florida and four other GOP senators urged President Joe Biden Monday to “halt” the PXW construction plans (see 2210170078) and Commerce is “working with the White House” to respond to those concerns, a spokesperson said: “BIS is conducting a review of existing policies related to China and will potentially seek to employ a variety of legal, regulatory, and, when relevant, enforcement tools to keep advanced technologies out of the wrong hands.” The bureau is “taking a comprehensive approach to implement additional actions necessary related to technologies, end-uses, and end-users to protect U.S. national security and foreign policy interests,” the spokesperson said.
Senate Intelligence Committee Vice Chairman Marco Rubio of Florida and four other Republicans urged President Joe Biden Monday to “take immediate action to halt” Huawei’s attempt to circumvent U.S. restrictions on semiconductor exports to the company by providing money for Chinese startup Pengxinwei (PXW) IC Manufacturing to build a chip manufacturing plant in Shenzhen. The GOP senators in a letter to Biden cited reports Huawei would likely buy most of the semiconductors made at the new factory, which would have capacity to produce chips of up to 14 nanometers. The first chips are expected to be available in the first half of next year. The other signers are: Marsha Blackburn of Tennessee, Tom Cotton of Arkansas, Ted Cruz of Texas and Bill Hagerty of Tennessee. “This would 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,” the senators wrote Biden. “With these new chips for its base stations, Huawei could resume its march towards 5G market dominance,” and the Chinese Communist Party “will advance its plan to control global telecommunications and extend its economic espionage and repression.” The lawmakers said they’re “deeply concerned that, despite the obvious threat that PXW poses, your administration has taken no official steps to delay the project’s progress, despite being aware of the project for some time.” The Bureau of Industry and Security’s “apparent inaction” in not already placing PXW on its entity list “is a dereliction of duty” given the company’s “clear connection with Huawei,” the Republicans said: “As far as we can tell, Commerce has not sent a single ‘informed’ letter to any entities potentially working with PXW, ordering them to halt all shipments to and transactions with the factory.” BIS and Huawei didn’t immediately comment.
The Bureau of Industry and Security released an interim final rule Thursday expanding an authorization for the release of some controlled software and technology to all entities on the agency’s Entity List if the release is for the purposes of standards-setting activities. Previously, the authorization had applied only for some Entity List entities, namely Huawei and its affiliates. The interim rule takes effect Friday. The long-anticipated interim final rule also amends definitions related to the authorization, including by setting a new definition for what is a standards-setting activity. It allows for the release of software and technology for cryptographic standards. The previously issued authorization had also mentioned only technology, and not software. Industry had called for the expansion of the authorization in recent years, saying that restricting the authorization to Huawei was causing uncertainty and chilling participation in standards bodies (see 2204130072). The national security threat from ceding U.S. participation “outweighs the risks related to the limited release of certain low-level technology and software to parties on the Entity List in the context of a ‘standards-related activity,’” BIS said in the new interim final rule.
The House Appropriations Committee voted 31-22 Friday night to advance the Financial Services Subcommittee’s FY 2023 bill with increases in annual funding for the FCC and FTC. The committee voted down Republicans’ bids to roll back a proposed substantial increase in FTC funding and altered a rider in the measure that removes an FCC barrier to broadcasters airing ads for cannabis products. The measure would allocate $490 million to the FTC, a 30% increase over what it received in the FY 2022 omnibus appropriations package (see 2203150076). The FY23 bill would give the FCC $390 million, up 2.3% from FY22.
The FCC and most other tech and telecom-focused federal agencies would get a funding increase in FY 2023 under a budget proposal President Joe Biden released Monday. Five entities -- the DOJ Antitrust Division, Commerce Department’s Bureau of Industry and Security (BIS), NTIA, FTC and National Institute of Standards and Technology -- would get double-digit percentage increases compared with FY 2022. Biden signed off earlier this month on the FY22 omnibus appropriations package, which itself increased funding for the FCC, FTC and other agencies (see 2203150076).
Senate Majority Leader Chuck Schumer, D-N.Y., said Thursday he hopes the chamber will pass the FY 2022 omnibus appropriations package that includes funding increases for the FCC, FTC, NTIA and other tech-related federal agencies (see 2203090068). The House voted 361-69 Wednesday to pass part the measure, filed as an amendment to shell bill HR-2471, that included funding for NTIA, other Commerce Department agencies, the DOJ Antitrust Division and the Cybersecurity and Infrastructure Security Agency. The chamber voted 260-171 to pass other parts of the HR-2471 amendment, including funding for the FCC and FTC. The omnibus would give the FCC $381.95 million and the FTC $376.5 million. NTIA would get $50 million, the Patent Office $4.06 billion, the National Institute of Standards and Technology $1.23 billion, and the Bureau of Industry and Security $141 million. BIS would also get a separate $22 million allocation to “respond to” Russia’s invasion of Ukraine. CISA would get $2.59 billion and DOJ Antitrust $192.78 million. CPB would get $525 million annually beginning in FY 2024. The omnibus hadn’t reached the Senate Thursday afternoon because House clerks were still processing the measure. “Once this bill arrives at the Senate, Republicans must work with Democrats to pass the bill as soon as possible, hopefully tonight,” Schumer said in a floor speech: “There’s every reason in the world to believe we can arrive at a path forward quickly.” Senate Majority Whip John Thune, R-S.D., told reporters Thursday there were “better than even” odds the chamber would pass the measure that night but cautioned a speedy process depends on Democrats allowing votes on four GOP amendments. If talks continue into Friday, Senate leaders may choose to move on a House-passed continuing resolution (House Joint Resolution 75) to extend federal funding through Tuesday. An existing CR to fund the government expires Friday night. Sen. Brian Schatz, D-Hawaii, touted the inclusion of language from his Creating Opportunities Now for Necessary and Effective Care Technologies for Health Act (HR-2903/S-1512) in the omnibus that would extend for 151 days a waiver of geographic restrictions on access to telehealth services and several other temporary rules changes allowing expanded use of the technology made during the COVID-19 pandemic. The full HR-2903/S-1512 would permanently end those restrictions (see 2110080002). “While this extension is helpful, these changes should be made permanent” by separately passing HR-2903/S-1512, Schatz said.
Senate Commerce Committee ranking member Roger Wicker of Mississippi and seven other Republicans urged the Commerce Department Monday to beef up its enforcement of restrictions on U.S. exports to Huawei and other companies on the Bureau of Industry and Security’s entity list, citing what they consider insufficient implementation. Huawei has been on the entity list since May 2019 (see 1905210013). The House Foreign Affairs Committee revealed last month BIS approved $100 billion-plus worth of export licenses for shipments to Huawei and top Chinese chipmaker SMIC from Nov. 9, 2020, through April 20 (see 2110220019). Commerce’s “lax enforcement” of its Foreign Direct Product Rule “has the effect of incentivizing other tech-focused companies throughout the supply chain to jeopardize our country’s security by transacting with Entity List companies like Huawei,” the GOP senators wrote Secretary Gina Raimondo. “Unless BIS enforces this rule with the speed the situation necessitates, additional suppliers of sensitive technology will likely engage in unlawful trade practices with companies closely connected to adversarial governments.” The lawmakers encouraged Raimondo to act “to ensure that BIS is equipped to enforce the full arsenal of the Department’s export control regulations -- and meet the challenges posed by this precarious moment -- considering the harms to national security they are intended to prevent.” BIS didn’t comment.
Amazon supports U.S. policy initiatives “that focus on diversifying and expanding the semiconductor manufacturing and advanced packaging supply chain through building out domestic resources,” it said in comments posted Tuesday in docket BIS-2021-0036. Comments were due Monday in the Bureau of Industry and Security’s request for information on the global chip crunch to help the secretaries of Commerce and Homeland Security prepare a report for the White House by the one-year anniversary of President Joe Biden’s Feb. 24 executive order on U.S. supply chains (see 2109230038). Any new policy initiatives on the chip shortage should also focus on “preserving relationships with trusted partners outside the United States, and investing in the growth of leading-edge technology capabilities,” said Amazon. “We are particularly concerned about the current lack of U.S.-based manufacturing capacity or capability to produce leading edge semiconductors at or below 7 nanometers, which creates a significant gap" in the U.S. semiconductor supply chain, said the company. The “geographical diversification” of supply chains and “uninterrupted access” to semiconductor technology is “vital” to American companies, “including Amazon and our customers,” it said.
The optical fiber that Corning supplies is a “critical enabler” for U.S. 5G deployment, and fiber networks “are the path forward to transmitting petabytes of data to people and devices instantly,” said the company in comments posted after hours Friday in docket BIS-2021-0021. The Commerce Department’s Bureau of Industry and Security sought industry comment to help the secretaries of Commerce and Homeland Security prepare a report to the White House by the one-year anniversary of President Joe Biden’s Feb. 24 executive order on supply chain disruptions in the “critical sectors and subsectors” of the information and communications technology “industrial base” (see 2111050041). Wireless networks “are moving from one optical connection per hundreds of thousands or even a million clients to one optical connection for fewer than 100” mobile phones, IoT devices or homes, said Corning. It continues to invest in R&D “at a much higher rate than our peers,” it said. The document is heavily redacted to hide information the company said “is not publicly available, pertaining to Corning’s business or trade secrets.” Also expunged are pages of Corning’s policy recommendations for identifying ICT supply chain risks and fixing the bottlenecks, except for a single sentence in a “workforce needs” section. Hiring, developing and retaining a high-skilled workforce, said Corning, is “paramount to the continued success” of ICT manufacturing. Q3 revenue in Corning’s optical communications business grew 24% year over year to $1.1 billion. It recently expanded its AT&T collaboration to bolster investments in fiber infrastructure, widen the availability of U.S. fiber-to-the-home broadband networks and speed 5G deployment.