Mannerisms

The Wassenaar Arrangement was signed in 1996 by 40 countries including the UK, the US, Japan, Korea, Russia, France, Germany, Spain, Sweden, Australia, Austria, Belgium, Canada, Denmark, Finland, Greece, Ireland, Italy, Holland, New Zealand, Norway, Portugal, and Switzerland.

There have been complaints in the past from the Americans that European producers of semiconductor manufacturing equipment have sold machinery to China in breach of Wassenaar, but now an icon of the US high-tech establishment has made available a process technology which is undoubtedly leading edge, and would be barred under Wassenaar.

It seems that the Bush White House has quietly relaxed the restrictions imposed by Wassenaar by saying there are some approved companies, operating in China, which can import technologies without a license.

So far the US has approved five companies to be in this select group, four of which are semiconductor related companies, National Semiconductor’s Chinese facilities, Applied Materials’ Chinese facilities, the Shanghai Hua Hong NEC Electronics Company and SMIC.

Obviously Applied and National are US companies. SMIC is Chinese, but is largely backed by US investment money, and the US investors obviously would like to see SMIC make profits. SMIC has only been profitable in one quarter since its IPO in 2004.

The other semiconductor company in the five approved companies, the Shanghai Hua Hong NEC Electronics Company is, according to a US body called the Wisconsin Project on Nuclear Arms Control, majority owned through a ‘corporate chain’ by the China Electronics Corporation which produces military equipment.

It is the use of leading edge technologies for military use which Wassenaar was specifically set up to prevent.

It is reported that a dozen more companies are waiting to get a high-tech export approval from the US government.

Gary Milhollin, director of the Wisconsin Project, calls the US government approach to licensing these companies a ‘stealth attack on export controls’.