US commerce chief says China export controls will hit companies’ revenue

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WASHINGTON (Reuters) – Commerce Secretary Gina Raimondo said on Wednesday the Biden administration is seeking to carefully target U.S. controls on exports to China, but rules will cost firms some revenue.

Restrictions should not be so broad “that you deny American companies revenue and China can get the product elsewhere, or China can get the product from other countries,” Raimondo said at a forum. Rules “will deny some revenue to American companies, but we think it’s worth it.”

Last week, U.S. chip company executives met with top Biden administration officials, including Raimondo, to discuss China policy, as the most powerful semiconductor lobby group urged a halt to more curbs under consideration.

Raimondo said the administration is meeting with companies “to get to the right place so we don’t damage American business but quite frankly protect American national security.”

Last year, China accounted for $180 billion in semiconductor purchases, close to a third of the worldwide total of $574.1 billion and the largest single market, according to the Semiconductor Industry Association.

Nvidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM) and Intel (NASDAQ:INTC) have crucial sales riding on China. Qualcomm is the only company with a license from U.S. regulators to sell mobile phone chips to Huawei.

The Biden administration is considering updating a sweeping set of rules imposed in October to hobble China’s chip industry and a new executive order restricting some outbound investment.

“This isn’t about holding China back or denying them commodity technology,” Raimondo said. China wants access to the United States most sophisticated technology “to advance their military and we’re not going to allow that,” she said.

The “timetable is as fast as we can and make sure it is correct,” she added.

Raimondo, Secretary of State Antony Blinken, National Economic Council director Lael Brainard and National Security Council director Jake Sullivan were among government officials who met with Intel, Qualcomm and Nvidia last week, according to a source familiar with the meetings.