A Chinese chip designer, part-owned by the country’s top sanctioned chipmaker, is purchasing U.S. software and has American financial backing, relationships that underscore the difficulty Washington faces applying new rules meant to block American support for Beijing’s semiconductor industry.
The company, Brite Semiconductor, offers chip design services to at least six Chinese military suppliers, a Reuters examination of company statements, regulatory filings, tenders and academic articles by People’s Liberation Army (PLA) researchers and institutions found.
Its second largest shareholder and top supplier, chipmaker SMIC, was placed on the so-called U.S. entity list over alleged ties to Beijing’s military, effectively barring it from receiving some goods from U.S. suppliers.
Despite those relationships, Brite boasts funding from a U.S. venture capital firm backed by Wells Fargo and a Christian university, and has continued access to sensitive U.S. technology from two California-based software companies, Synopsys and Cadence Design, documents showed. Reuters has found no evidence that Brite’s relationships with U.S. firms violate any regulations.
The Biden administration, with bipartisan support, has taken pains to stop the flow of technology and investment to Bejing’s chip sector, unveiling rules last October to halt some U.S. exports of chips and chipmaking tools to China and in August announcing a ban on certain new U.S. investments in the industry. It has also added dozens of Chinese companies to the entity list, many over ties to China’s military.
Brite did not respond to requests for comment. The Commerce Department and the White House declined to comment. The Chinese Embassy in Washington did not comment on Brite but accused the United States of “blatant economic coercion and bullying in the field of technology.”
Although not an apparent breach of any U.S. rules, Brite’s access demonstrates the challenges facing Washington’s bid to keep U.S. equipment and money from being used to advance China’s military ambitions, and suggests the U.S. will struggle to succeed unless it targets many more companies that have slipped under its radar.
Republican Senator Marco Rubio, an influential China hawk and member of the foreign relations committee, characterized Reuters’ findings on Brite as “concerning.”
“Companies connected to China’s military supply chain should not have access to American technology and investment. The Biden Administration’s haphazard approach to export controls and investment restrictions clearly is not working,” he said.
Others said Brite illustrates Beijing’s ability to use low-profile companies to skirt American export bans on big-name Chinese firms.
“Brite is a classic example of how a US-China joint venture could end up funneling valuable semiconductor technology to SMIC and the PLA,” said Martijn Rasser, managing director of Datenna, an open-source intelligence company.
China’s defense ministry and SMIC did not respond to questions about their relationships with Brite.