The Trump administration has stepped up the high-tech side of its trade fight with China with the publication of a request for public comment on tightening export controls by the Commerce Department.
The request seeks input on identifying “emerging technologies that are essential to the national security of the United States.” The current list covers 14 broad categories of technology that have dual civilian and military applications, including artificial intelligence, biotech, microprocessors, advanced computing, and robotics.Political risk consultancy Eurasia Group’s Paul Triolo commented on Twitter: “Huge…while this is only call for comments on reference list of technologies, the vast majority are likely to stay on the list…clearly directed primarily at China.”Deutsche Bank predicts a “profound and long lasting adverse impact” on U.S.-China relations if the measure goes forward, according to Bloomberg(porous paywall).U.S. Commerce Department officials call this part of “the most complex, intellectually challenging, and economically significant effort to identify simultaneously multiple disparate categories of undefined emerging technologies for non-specific national security concerns,” according to Politico. However, the fast-track comment period of 30 days, instead of the typical 60, comes just as the holidays get under way, along with the busy year-end work period when those in the industry are focused on meeting annual goals.More background from Politico:
The rule will implement portions of the Export Control Reform Act, which was passed in Congress in August as part of a broader defense bill that included a major overhaul of U.S. investment screening procedures. The legislation allows the Trump administration to cite national security to control exports of goods or technology that may not necessarily have a military use but could have economic or competitive advantages.
Nvidia and SenseTime in the crosshairs?
Here is another development that could have serious implications for tech firms on both sides of the Pacific. Nvidia, which makes advanced computer chips used in AI applications, sells to U.S. firms such as Uber and Microsoft, but, as the WSJ (paywall) reports:
Nvidia gets even more revenue from China. Chinese tech giants including Alibaba Group Holding Ltd. and Baidu Inc. use its products. So do companies developing facial-recognition and other domestic police and surveillance technologies, along with a university lab that worked with Chinese military researchers.
One customer that Nvidia has been “indispensable” to is SenseTime, described by Bloomberg (porous paywall) as “the world’s most valuable AI startup,” with investment from Alibaba, Fidelity International, Qualcomm, Silver Lake, and Tiger Global Management.
SenseTime sells artificial intelligence software that recognizes things, especially people… Various Chinese police departments use its SenseTotem and SenseFace systems to analyze security footage and bust suspects….
In September, China named SenseTime one of five “national champions” in AI alongside internet powerhouses such as Alibaba Group Holding Ltd. and Tencent Holdings Ltd., a distinction that means critics and U.S. officials will be watching its expansion more closely.