When Xiao Wang got a job offer last year from the US unit of ASML, a Dutch company in the semiconductor industry, he did not expect US-China trade tensions to end this new chapter in his career before it started.
Wang, a Chinese national living in the US for eight years, was working for a mechanical equipment manufacturer in Connecticut at the time. He learned about the recruitment drive at ASML, which has a research unit in Connecticut, from social media posts, including some by Chinese employees of the company.
Hoping to gain more professional experience, Wang applied, and had a good interview. When ASML offered him the job in February, he accepted.
Before he could start, though, ASML, following the normal procedure, applied to the US Department of Commerce for a “deemed export” licence for Wang. The licence, which allows access to technology that is otherwise restricted, is required for a non-US national to take a job with national security sensitivity in the US. But after more than three months, Wang learned that his application had been rejected.
The denial, in June, came as the US and China had reached an impasse in trade talks and were edging closer to a tariff war. US concerns about China’s intellectual property thefts, cyberespionage, market barriers and lack of investment reciprocity were sticking points, and Washington is filled with rising fears about Chinese access to US high technology. Wang’s plans to advance his career in the semi-conductor industry were collateral damage.
“It shouldn’t have been a problem to obtain the licence. There are Chinese employees working there,” Wang told the
South China Morning Post. “My friends and I talked about the US-China trade war, but I hadn’t expected that such a thing would happen to me.”
While recent data is hard to come by, according to official government statistics and industry analysts, Wang's predicament is becoming more prevalent.
According to US Department of Commerce statistics from 2013 to 2017, Chinese nationals are usually granted more than half the “deemed export” licences the department issues each year. In 2016, it approved 809 deemed export licenses to Chinese out of a total of 1,388 approved. In 2017, the department granted 781 to Chinese of a total of 1,406 approved.
The department has yet to release the data for 2018 due to the recently ended government shutdown. The Commerce Department does not publish its approval ratio, nor does it discuss reasons for denying applications. It did not reply to
Post requests for comment.
Even so, industry analysts warn, it will be more challenging for Chinese to obtain the licences in the months ahead.
Doug Jacobson, an international export-control lawyer in Washington, said that deemed export licences are reviewed “case by case”, and a decision of an approval or a denial depends on a person’s background, work experience and the nature of technology.
Still, he noted, Chinese nationals are expected to “get extra scrutiny” amid the fractious trade relations between the US and China.
“Each of these types of decisions with regard to the deemed export license for a transfer of technology to a non-US person in the United States or outside US, those are always given a great deal of scrutiny and certainly the issues right now in the US-China trade relations are not helping at all,” Jacobson told the
Post.
“It makes a big difference not only in the background but also the jobs they are going to be doing and how much technology they are going to have access to.”
The US has labelled China and Russia as its strategic competitors, and there is a strong bipartisan belief in Washington that China poses a long-term challenge to US technological dominance.
Like administrations before it, the Trump administration has accused China of stealing trade secrets via cyberespionage and other forms of intellectual property thefts.
But the Trump administration has gone further, raising bars against Chinese access to the US high-technology market. Since late 2017, the government expanded the authority of the Committee on Foreign Investment in the United States to review a broader range of business deals based on national security concerns.
And in August, the US furthered its regulatory grip, passing the Export Control Reform Act. Under the new law, the Commerce Department is developing a list, to be released this summer, of technologies considered key to US national security and thus subject to tighter export controls.
Dan Wang, a technology analyst with Gavekal Dragonomics, a research firm that focuses on China, wrote a report that concluded that the greater the number of technologies listed, the greater the impact on the workforce of the US tech sector.
“Affected technology companies would have to do one of three things: move their Chinese national employees off the teams working on those technologies; obtain licences from the Department of Commerce to enable these employees to continue their work; or terminate these employees,” he wrote.
“To comply with tighter export controls, both companies and university labs will need to start segmenting what their US and non-US personnel can work on, and will need to figure out how to handle previously routine exchanges of information and technology between US facilities and foreign subsidiaries,” he said in the report.
But such arrangements are easier said than done and could hobble some technologically innovative companies.
“Obtaining licences when hiring such personnel would present a tremendous burden for small, high-growth start-ups that often build teams by attracting the best and brightest from foreign countries,” the US National Venture Capital Association, which calls itself “the voice of the US venture capital and start-up community”, said earlier this year.
ASML, headquartered in Veldhoven, Netherlands, is the world’s largest supplier of photolithography systems for the semiconductor industry. Its clients include the chip makers Intel, Samsung and TSMC (Taiwan Semiconductor Manufacturing Company).
The company’s core products are hi-tech hardware and advanced software that help users control the shape and size of their chip patterns. ASML reported a record net sales of US$12.4 billion in 2018 and said that demand from China has remained strong.
In an email response to the
Post, ASML said it is “a hi-tech, knowledge-intensive company” and it does not “restrict hiring any nationality”.
“We believe diversity strengthens our ability to innovate and welcome engineers from all over the world. The export licence requirement is not new. ASML can hire and is still hiring Chinese nationals,” the company said.
In its trade talks with the US, China initially demanded that the US ease the export control, but people briefed on the talks ruled out the possibility that the US would agree. It is unclear whether China raised the proposal in the latest round of talks last month in Washington.
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