NDAA Ban Proposed Expansion to Cover 3 PRC Chipmakers
While the NDAA ban started with Huawei, Dahua, Hikvision, and 2 others, it has since expanded to 10 companies, and now a bipartisan Senate proposal seeks to expand it further to cover 3 PRC chipmakers "with known links to the Chinese Communist Party that threaten national security.”
If passed, the new rule could require security and surveillance companies - and a broad range of other industries - to revamp supply chains for practically every electronic device they sell to the Federal government or use themselves.
Inside this note, we examine the expansion proposal and, based on feedback from Avigilon, Axis, BCD, Hanwha, Genetec, and assess how it will affect the surveillance market.
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*** *******, ** ****** *********** ******* to *** ********* **** ******* ************* components **** *** ** *** * companies, ****** ***** ** ****** ******* contract **** *** ** ********** ** supply *** ************* ***** *******.
(*** ****:**** ***** ************ *** / ********** Guide)
*** ******** *** ********** ** *** 2023 ******** ******* ************* *** (****), which ********** ****** ** *** *** of *** ********* **** (****). ******* 889 ********* ****** ** **** ** an ********* ** *** **** ****. However, ** **** **** *** ********* would *** **** ****** ***** ****, three ***** *****.
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******** ******* *** ***** ** *** chipmakers ***** ****** ********** **** ********** kettles ** ****. ****** ***** ************ and ******************, ************* ******** - ******** chips/SOCs, ***** ******, ****, ***. - are ********** ** ****** *** ****** electronic *******.
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*** ********* *** **** ******** ******* 889's ****** ** *** ******** *** surveillance ********. *** **** *** ******* extends ****** ***** *** ********* ** covering *** ******** **** ****** **********, since **** ************* **** ****** ********* SOCs,**** ** ********* *-***. ************* **** *** **** ** ensure ** ********** **** * ********** chipmakers, *** *** ****** ***** ** the ****.
SMIC - ******** ********* *** *************
**** ***** ******* * *********** ********** challenge - ** * ***** *******, producing * **** ******* ** ********** - ***** ** ******** **** ******** from *************. *******, *** ************* *** replied ** **** **** ********* **** do *** *** ********** **** **** or ****.
******** ****** "** **** *** ********** any ************* ******* **** **** ** our **** ********," ********** **** ********** may ** ******* ** ***-**** ********.
** **** ***** ** *** *** aware ** *** ********** ** *** of *** ******** **** ***** *******. However, ***** **** **** ** * foundry, *** * **** ******, *****'* some **** ******** ** *******, ***** is ** ******** ** *** ******** team.
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* *** ******* **have *** ********** any semiconductor content from SMIC ** *** ** *** **** ********. [emphasis added]
**** ****** ** **** *** **** any "****** ********" ********** "******** **********" from *** **********, *** ** ***** "to *** * ****** ************* ** the ********* ********* ** ******* *** and *** ************** ****** ** *** comment *** *******."
We ***’* **** *** ****** ******** **** ******* ******** ********** from any of these companies. But we need ** **** ****** **** **** ** *** * ****** ************* of the suggested expansion of Section 889 and its implementation before ** *** ******* *** *******. For instance, there are wordings in the suggested extension that need to be clarified, such as how “critical technology” or “essential component” should be interpreted. [emphasis added]
******* ****** ** ****** ** **** into *** ****** *******, ******* **** manufactures * **** ******* ** ********** from ***** ** "******, ***********, ********* controllers, ***."
***-"****** ********" **** ********* *** ** more ****** ** ******* **** ********** since *** ********* ******* ******** ***** memory *** **** *********** **** *** common ** ***** ******* ******* *** rare ** *******.
*** *** ****** ****** ************* **** they ** *** **** *** ********** from *** * **********.
Genetec: "**** ******* * *** ** ****, *** ***** *******"
******* ****** ** **** ** ********** "will ******* * *** ** ****, for ***** *******, *** **** **," adding "****’* ******** *** **** ****** to **** * * ***** ***** period. **** ** * *** **** if **** ***** **** *********."
******* *** **** * ***** ********* of ******** *********-****** *** **** ** components **** *****, *********, *** ******. That **** ******* ***** *** *********** answer ** ** ***** ** ********* indicates *** ******* *** ********* **** be * ******* *** * **** variety ** *****.
*******, ********* ********** **** ** ****** for *************-******* ********* - **** ******, which *** **** ** ******* ******* - ****** ***** ***** *** ******** like *******. ******* **** ***** ** the *********** "**** ***** ********* **** Texas **********, ******, *****, ***. **** emit * ***** **** ** ***** that *** ** *******," ***** ***** likely ****** ** **********.
*******'* **** ********:
**** ** * ***** ****** ** the ************* *****, ********* *** ******* equivalent ** ****. **** **** *** TSMC,a *** ** ***** ** ********* *** ***** **** ** *********** ***** ***** (they use it in “fabless” mode), even if the chip itself has been designed in the US. Most often, these are simpler chips with no cybersecurity or IP concerns: like diodes, transistors, switching controllers, etc.
This ********** **** Not just look at the CoO. If the proposed expansion is adopted, it ** ******** **** ***** ********* **** ***** **********, ******, *****, ***. **** **** * ***** **** ** ***** **** *** ** *******, but it’s also possible that they won't.
*** ******* ************ ********, ** **** do **** *** ********* **** *** assistance ** ** ******** ****, *** undertake ******** ************** **** *** ************* manufacturers.
*** ***-***-***** ** ********** ******** **** those **** ****, ***, *******, ***., only *** *** *** ** **** assessment ***** **** *** *** ****** of *** ****** *** *** *** material ****. ***, **** **** **, they **** **** ** ** **.
*****’* ** *** *** *** ** such ** ********** **** **** * quick ******. *********, * **** *** be ************ (***) ** **** *** example, **** ******** ** ***** ** Malaysia (** ***********), *** **** * CoO ** ********. *** **** ***** still ** ** **** ************* *****, even ** *** * ***=*****.
That’s ******** *** **** ****** ** **** * * ***** ***** ******. **** ** * *** **** ** **** ***** **** *********. [emphasis added]
3 *** ********** **********
** *** *, **** **** ** publicly-listed, *** ** ******************* ** $*.** ******* **** $*.* billion ** ******. *** ******* *********** *****-*****, ****** *************** ******* ******* ** ***** ***********.
**** ** ***************** ** *** ** ********** ** Commerce*** ** *** ******** ****, *** requires ** ********* ** ****** * license ** ** ******** **** ****. In ******** ****,*** ** ********** ** ******* **** designated**** ** "***** ** **********" ** the ******'* ********** ****, *** ********** US ***********.
**** *** ******* ** **** **** $24 ******* ** ******* **** *****-****** Tsinghua ********. ** ******* ******** ***** memory ********** - **** *****, *** controllers, ***. - ****** ******* *******,*** ********* *********. ** ****** ******, YMTC *** ********* *********** *********** ******* *** ******** ****.
****, ******** ***** ** ********, *** founded ** **** ** ******* **** products **** ******* **** *** *** government-backed ****** ********** ********** ****. ** 2019, ****** **** **** **** *** on *** ********* ** ****** *** **** ********** *****:
[***] ******* ******* ** **** ** about ** ****** *** *******'* ***** mass ******** ** ******* ******** *** memory *****, ********* **** ****** ******* Electronics *** ****** ********** ** * $100 ******* * **** ******, ** Beijing ***** ** *** ***** *** self-sufficiency ** **** ************.
...
*** *******, ***** *** ******** $* billion ** * **** ********** ***** in *** ******* ******* **** ** Hefei, ******* ** ***** ********** ** these ******* ****** ********** ** *** end ** *** ****, **** ****.
National ********, ************ ******** **** *********
******** ******* *** ******, *** ********** worked ******** ** ******* ***** *** ******* ************ $*** ******* **** ** ******** chip **********, *** ******* ** ******* national ******** ******** ****** ** ******** vulnerabilities ** ************* ******** *** * PRC-controlled ************* ****** *****.
******* *********** ** ****** **"********** ******** ********, ***** ******** ************* manufacturing **** **** ********, *** ***** foreign ********* ** *** ****** ********* market." ** *****, "************* ********** *** services *** ****** **** **** ************ in ******* *********** ******** * ********* major ***** ** ************* *** *****-******* and **** *******."
**** ******** ******-**** ** ******** **** chip ******** **** ****** ************ ******* between *** ** *** *****, ************ as *** ********** ** * *** invasion ** *** ******* ** ****** increases. **** ** *** *****'* ******** computer ***** *** ******** ** ******, putting *** **** ** ******* **** of * ****** ************ ** ******.
*** ********* ** **** ****** ****** bolstering ** ******** ********** ** ***** and ******** ****, ************ *** ******* New ****'******** ************* ********. ** *** ************, ******* **** the ********* ***** "****** ******* ** jobs," *** "*** ************* ****** ****** should ** ******* **** ** **!"
** ***** ******* ** ** ** someday, *** ***** *** ** ***** not ** **** ****** ***** *** expansion ** ******** ** **** ****** in * *****, ** ***** ***** such * **** ***** ** ******** anyway.
***** *** ****** *** ***** ************* enough ***** **** ******* **** ** be **** ** ************* ***** *** are *** ***** ********** **** ***** mfgs. **-***** ************* *** *** ***.
*** ** *********, *** ***** *** other ************* *** *** ***** *** production *****/*********? ** *** ** *'* aware, ****** ** *** **** ***, and **** *** **** *** ** manufacture ***** *** **** **-***** (** opposed ** **** *** ******* *** I ******* ********* ** ****, ******** I **** ** *****).
***, **** **** *** *** ******* in ***** ***** *** **** ********* and ***** ********.
* ********any ******* giving an immediate answer that they do nothave *** ************** *** * **********, ****** ***** OEMs,like ****, *******
** ********* ******* ***:
******* **** ************ * **** ******* of ********** **** ***** ** "******, transistors, ********* ***********, ***."
** ** ******** **** ***** ********* like ***** **********, ******, *****, ***. will **** * ***** **** ** chips **** *** ** *******
** ***** ***** ********* **** **** interested ** ** ********* "**" ******** to **** ******* ****** **** * thorough *********** ** ******** **** **** / ******
**** **** ** ********** * **** of ******** ********** ******* ************ **** CXMT, **** *** **** ***** (** any)?