By Gabby Chen

The US senators scaled back a proposal that placed new curbs on the use of Chinese-made chips by its government and contractors, amid pushback from trade groups like the US Chamber of Commerce, Reuters reported on December 6.

Top Senate Democrat Chuck Schumer and John Cornyn, a prominent Republican China hawk, unveiled a measure in September that would have required US federal agencies and their contractors to stop using semiconductors manufactured at China’s SMIC, as well as chips made by Chinese memory chip leaders YMTC and CXMT, said the Reuters report.

The measure, added as an amendment to the National Defense Authorization Act (NDAA), drew fire from the Chamber of Commerce and other trade groups, who said in a letter last month that it would be costly and difficult for companies to determine whether SMIC manufactured the chips contained in a vast array of electronics.

Chips made by SMIC are commissioned by companies all over the world and can be found in products as diverse as cell phones and cars. They are difficult to identify because chips are not typically labeled with the names of the companies that manufacture them.

The final version updated on December 1 no longer forbids contractors from “using” the targeted chips and pushes the compliance deadline back to five years from the immediate or two-year implementation deadlines, said the report.

Meanwhile, it also narrows the scope of the restrictions, noting they only apply to items destined for the government’s “critical systems,” which include telecoms or information networks involving intelligence activities or command of military forces or weapons, among others.

The powerful US business group also argued in the letter signed by telecommunications and defense industry groups that rooting out such chips from common appliances like toasters or forcing federal contractors like paper suppliers to take on such a monumental task would not further US national security, Reuters quoting a Politico report.

The Chinese Embassy in Washington said it “firmly” rejects the inclusion of negative language about China in the legislation and said that the Chamber of Commerce letter “shows that arbitrary disruption and damage to the global industrial ... supply chains serves no one’s interest.”

So far, Schumer’s office, SMIC, YMTC, CXMT, and the Chamber of Commerce did not respond to requests for comment, according to Reuters.