Five firms named VEU of U.S. tech exports to China

Four chipmakers are among the five companies approved by the U.S. Commerce Department as "validated end-users" of U.S. technology exports to China, the agency said.

The Commerce Department’s Bureau of Industry and Security (BIS) has announced the five companies, namely, Applied Materials China, Boeing Hexcel AVIC I Joint Venture, National Semiconductor Corp., Semiconductor Manufacturing International Corp. (SMIC) and Shanghai Hua Hong NEC Corp.

The end-user program will "make U.S. exporters more competitive in China," Mario Mancuso, Undersecretary of Commerce for industry and security, said during a conference call Oct. 19. Mancuso added that the agency’s resources can now be shifted to other regions to "enhance security elsewhere."

Being designated by the U.S. government as a validated end-user means individual export licensing requirements will be removed on shipments of controlled items to the five companies. In return, the companies agreed to on-site audits by U.S. officials and strict record-keeping requirements.

Mancuso said he expects other U.S. companies operating in China to be added soon to the list. The program will soon be expanded to India, he added.

The five companies accounted for 150 export licenses between 2002 and 2006. BIS said the companies were approved based on, among other criteria, their non-military business operations in China and previous compliance with U.S. export controls.

Export control policy
Listing the five companies as validated end-users is a first step in implementing a new U.S. export control policy toward China announced in June designed to tighten restrictions on dual-use technology exports. Among the technology covered under the new export policy are avionics, composite materials and telecommunications equipment with military applications.

While Mancuso stressed close consultations with China officials in developing the export policy, critics of the initiative have questioned the level of U.S.-China cooperation. They point to a recent directive by China’s Ministry of Commerce requiring that companies in China must receive government approval before submitting to U.S. on-site audits. The rub, critics said, is that validated end-users have already agreed to U.S. audits.

Mancuso sidestepped questions about the China government’s directive, saying only that "we consult with the Chinese" and that the export program is transparent to Beijing.

Without mentioning the China ministry, Mancuso added: "We work closely with China, but this is an American program.

According to BIS, approved China facilities and technologies are:

?Applied Materials’ plants in Beijing, Shanghai and Wuxi that supply pressure transducers, semconductor raw materials and spare parts for ion implantation, etching, wafer handling and lithography equipment.

?Boeing’s Tianjin plant that provides composite aircraft materials and machine tools for composite aircraft manufacturing.

?National Semconductor’s Beijing, Shanghai and Shenzhen facilities supplying ADCs.

?SMIC fabs in Beijing, Chengdu, Shanghai and Tianjin supplying semiconductor chemicals, materials and manufacturing equipment.

?Shanghai Hua Hong NEC’s Shanghai chip fab that also supplies chemicals, materials and manufacturing equipment.

The Commerce Department announcement made no reference to which, if any, semiconductor technology nodes are covered under the validated end-user program.

Critics said the China export program fails to define specific terms like "military use." The export control program "hasn’t been thought through," said Donald Weadon, a Washington-based export attorney.