The U.S. is embedding tracking devices in shipments of export-controlled chips to prevent smuggling and diversion into China, according to Reuters. To learn more about how the U.S. is stepping up export control enforcement, TaiwanPlus spoke to Taylar Rajic of the Center for Strategic and International Studies (CSIS).
00:00Taylor, I want to start by getting your reaction to this Reuters report that the U.S. is embedding tracking devices in shipments of export-controlled chips in order to prevent smuggling or diversion into China.
00:13Do you consider this to be an escalation in terms of enforcing export controls?
00:18Definitely. I think it's moved to a more covert surveillance side of this.
00:23It's also come at a time where, obviously, the NVIDIA announcement in the last few days has also escalated this as well.
00:33I think that the tech competition between China and particularly in terms of export controls and semiconductors has reached a new level that it wasn't at before.
00:43And it's definitely an escalation of enforcement of export controls as well.
00:48Does embedding these tracking devices work well?
00:50Do you consider it to be an effective strategy to prevent these chips from getting into China?
00:55I think so.
00:56I definitely think it's not the perfect strategy, but it's definitely a step in the right direction in enforcing these export controls.
01:03The idea of it has been around for a while.
01:06The Chip Security Act that was introduced a few months ago definitely spoke about location tracking of these specific chips
01:13to kind of really get to the point of chip smuggling and the issue of it that clearly are falling through the gaps with the existing export control regime that's in place.
01:24This news comes as NVIDIA is trying to clinch a deal on selling its H20 chip in China,
01:30even offering to pay 15% of its China sales to the U.S. government.
01:33China, meanwhile, is telling its companies not to buy NVIDIA and to buy Chinese instead,
01:39saying that American chips have back doors and pose a national security risk.
01:44How do you think this news moves the needle on the H20 debate?
01:48It's a really interesting point for China now,
01:50and it either has the decision to continue to use the H20 chips and rely on U.S. tech,
01:56which may be at a more advanced level, or if they sort of continue this alternate route of using what might be good enough,
02:03but not better, with the sort of national security concerns that they have.
02:09And I think that this is an interesting crossroads for them,
02:11and I think that the actions that they take after this will be pretty indicative of how they're going to continue down this route.
02:18Personally, I think that they will continue to buy the H20 chips.
02:22It was specifically designed for the Chinese market,
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