10.18.22

SCHUMER REVEALS: MAJOR SEMICONDUCTOR TECH COMPANIES WITH TIES TO FOREIGN GOVERNMENTS THREATENING NATIONAL SECURITY & PUTTING NEW YORKERS DATA AT RISK; STANDING AT ALBANY NANOTECH, SCHUMER LAUNCHES NEW PUSH TO REMOVE CHINESE CHIPS FROM U.S. SUPPLY CHAINS TO STRENGTHEN NATIONAL SECURITY AND BOOST THE U.S. CHIP INDUSTRY, INCLUDING IN UPSTATE NY

With The Capital Region Growing As a Global Hub For The Microchip Industry, Schumer Launches All Out Effort To Strengthen National Security, Boost US Chip Industry, And Create Upstate NY Jobs By Ensuring Semiconductor Products Used By The Feds Are Made In The U.S.

Schumer—Author Of The Historic CHIPS And Science Bill That Is Bringing Semiconductor Manufacturing Jobs Back From Overseas—Now Wants To Cut Off Fed Use Of Chips From Companies With Known Links To The Chinese Communist Party That Threaten National Security

Schumer: Our Semiconductor Supply Chains Should Be In The Capital Region Not China!

On the heels of his historic CHIPS and Science Bill becoming law, which is already drawing major semiconductor investment to Upstate New York, U.S. Senate Majority Leader Charles E. Schumer today is launching a new push to limit the use of semiconductor chips made in China, including in supply chains for the Defense Department, in order to strengthen national security, bring critical semiconductor manufacturing back from overseas, and limit foreign dominance of the global microchip market.

Standing at Albany Nanotech, Schumer revealed that major Chinese companies, with known links to the Chinese Communist Party (CCP), are actively selling microchips to companies that do business with the federal government, and suppliers to those businesses, which makes the U.S. government more vulnerable to cyberattacks and the exfiltration of information by foreign competitors, and potentially puts New Yorkers’ data at risk.

To combat this, Schumer said he is working to add a bipartisan provision to this year’s National Defense Authorization Act (NDAA) to limit the use of products or services procured by the federal government if those products or services use chips from known companies that pose a national security risk, which will not only protect the security of U.S. supply chains, but help boost demand for more domestically made microchips, including from places like Upstate New York.

“Because of my CHIPS and Science bill, Upstate New York is seeing unprecedented investment and thousands of new jobs rebuilding American microchip manufacturing, including here in the Capital Region, where GlobalFoundries, with a boost from the feds, will be able to accelerate their plans to build a second fab, and Albany Nanotech is primed to become the major hub of America’s first National Semiconductor Technology Center (NSTC). Now that these investments are happening though, we need to actively address another significant threat to not just the success of American industry, but also to our national security of China, through companies backed by the Chinese Community Party, supplying chips to companies that do business with the federal government, undermining U.S. supply chain and potentially putting New Yorker’s data at risk,” said Senator Schumer. “That is why I am launching a new push to crack down on the use of Chinese-made chips in the supply chains that support our government. It’s simple: if you want the federal government to buy your products or services, you can’t be using the kind of Chinese-made chips that put our national security at risk. To win the 21st century we need to secure our supply chains, and make sure the chips that our government and economy rely on are built in places like the Capital Region and not by companies backed by adversaries like the Chinese Communist Party.”

Schumer explained that semiconductor technology is a critical part of not only our daily lives with microchips being used in everything from smartphones and household appliances to cars, but also are critical to our national security with our military technology and critical infrastructure fully reliant on these chips. Currently, however, semiconductor technology and services are absent from many restrictions in federal procurement creating a potential major point of vulnerability for cyber-attacks and data privacy.  The Chinese Communist Party has made it a priority to invest in expanding their homegrown microchip industry to dominate more of the global market of this critical technology, efforts that have grown the industry significantly in recent years. In 2011, China had just under 1,300 chip companies, but by 2020, this number grew to 22,800.  Earlier this year, the CCP-backed chip company, Semiconductor Manufacturing International Corporation (SMIC) reportedly produced an advanced 7nm chip using some of the most advanced chip manufacturing capabilities, sending a warning sign that the Chinese Communist Party is making concerning strides forward in leading in this critical technology.

Specifically, Schumer’s NDAA provision adds three Chinese companies, including SMIC, as well as ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC), all with known links to Chinese state security and intelligence apparatuses, as newly covered entities to limit federal procurement of products or services that uses microchips produced by these Chinese companies. Schumer said this addition will help protect safe and trusted suppliers of semiconductor technology by limiting the proliferation of nefarious semiconductor products, helping build more secure and resilient domestic supply chains of chips made in places like Upstate New York. GlobalFoundries’ planned expansion in Malta, NY, along with the leadership Albany Nanotech and its partners are providing in some of the most cutting-edge microchip research and development, position the Capital Region and Upstate New York to supply chips needed by our military and other critical infrastructure and replacing Chinese-made chips that threaten our national security.

These policies and regulations are proven to work in getting companies to divert investment from suppliers that could risk national security. Following pressure from Schumer and other national security leaders, Apple this week is reportedly freezing its plans to use memory chips from China's YMTC in its products given that the Biden Administration recently added YMTC to an export control list, an action that Schumer has been actively pushing for given the national security concerns posed by the use of YMTC and other Chinese-made chips. This work builds on Schumer’s long-time efforts of shedding light on Chinese companies linked to the CCP operating in the United States. In 2019, Schumer led a bipartisan letter requesting the Department of Defense to publish a list of companies operating in the United States that are owned or controlled by the Chinese military. Schumer’s efforts directly led to DoD making public for the first time a list of Chinese companies that are operating in the U.S in June 2020. The Biden Administration has added further companies to this DOD list, including SMIC. 

Schumer has worked non-stop to uplift the Capital Region and Upstate New York as a major hub to lead the nation in semiconductor manufacturing and research. In March 2021, following a call with the CEOs of IBM and Intel, Schumer announced a new partnership that will bring hundreds of jobs to the Albany region to conduct new semiconductor research in the area, boosting it’s already robust local chip research presence. Then, after bringing the Commerce Secretary to Malta to announce GlobalFoundries second chip fab last year, Schumer had Secretary Raimondo meet with Albany Nanotech leaders to discuss the facility’s cutting-edge capabilities. The senator continued this momentum earlier this year by bringing the Commerce Deputy Secretary Don Graves to tour the facility as well and meet with Governor Hochul and industry leaders to reiterate how the Capital Region and Albany Nanotech are uniquely suited to quickly stand up the NSTC and ensure the U.S. can lead in the development of the world’s most cutting-edge microchips. In 2022, after Schumer personally advocated to Secretary of Defense Lloyd Austin, the Defense Department announced a $117 million Defense Production Act Title III agreement between GlobalFoundries and the U.S. Department of Defense (DoD) to provide a strategic supply of semiconductors made in GlobalFoundries Fab 8 facility that are critical to national security systems, including the nation’s most sensitive defense and aerospace applications.

Schumer has been the leading champion of bringing semiconductor manufacturing back to America and has a long history of fighting to secure this investment for Upstate New York. Going back to 2019, Schumer proposed a major tech investment “moon shot” in cutting-edge technologies like semiconductors to out-compete China. Schumer then spent the next three years working to pass into law this vision – ultimately manifesting itself into the CHIPS and Science Act, which makes a generational investment in innovation and manufacturing, including providing over $52 billion in new federal incentives for microchip manufacturing and research and development in the U.S., along with the creation of a new federal investment tax credit to support the expansion of domestic microchip production.

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