WASHINGTON/TOKYO/LAS VEGAS, U.S. -- The U.S. government is set to sharply expand restrictions on foreign access to sensitive technologies, a move aimed at curbing China's ambitions but whose unclear scope worries Asian companies with businesses dependent on both countries.
The Department of Commerce on Thursday closes a public comment period on a proposal to expand export controls to 14 areas of new technologies with an eye toward national security. They include artificial intelligence, robotics and biotechnology as well as fields still in the early stages of development, such as brain-computer interfaces.
The rules look to block avenues China has used to access American tech. Chinese companies and investment funds have been able to gain sway over U.S. startups through early investment and transfer promising new technologies to China. But businesses in Japan, South Korea, Taiwan and elsewhere could also find their hands tied.
Any exports that would transfer covered technologies to China or other nations considered security threats would require the approval of American authorities. This may include development of products in China that use U.S. patents.
Many Asian manufacturers rely on cross-licensing agreements -- under which companies share access to each other's intellectual property -- with American partners. "There are many semiconductors that we simply can't produce without U.S. patents," an executive at a Japanese chipmaker said.
Others have expressed concern that the uncertain extent of the rules puts cross-border supply chains at risk. "We don't know how broadly national security reasons will be interpreted," an executive at a machinery company said.
Beyond disrupting supplies, the rules could also threaten collaboration between Asian companies and U.S. startups in emerging technologies. At the CES consumer electronics show in Las Vegas this week, South Korea's LG Electronics announced a partnership with Silicon Valley startup Landing AI, led by former Google AI engineer Andrew Ng.
Also for CES, Chinese computer giant Lenovo Group touted products developed with Google and Amazon.com technologies. A new smart clock responds to Google Assistant voice commands, while a new smart tablet is powered by Amazon's Alexa.
Hong Kong-listed food delivery and online services company Meituan Dianping, meanwhile, said it signed at CES a partnership with Nvidia to co-develop driverless logistics solutions. The California-based graphics processor company will help build an AI platform and supply related hardware. Meituan has bet on self-driving vehicles to meet soaring demand for food delivery.
Many Asian companies in such fields as AI conduct research and development in the U.S., which boasts a high concentration of cutting-edge facilities. If a Japanese automaker uses AI technology developed in the U.S. to start an automated-driving service in China, for example, the company may run afoul of the new rules.
The impact of losing access to American technology was demonstrated last summer, when a U.S. ban on doing business with Chinese telecommunications equipment maker ZTE put the company's survival in doubt. The restrictions were later lifted, but China's Huawei Technologies, the world's biggest telecom equipment supplier, has also allegedly run afoul of U.S. rules on dealing with Iran.
Cross-border corporate deals could face more roadblocks even in cases where none of the companies involved are American, exacerbating a growing trend.
Japanese building materials maker Lixil Group's planned sale of architectural subsidiary Permasteelisa, an Italian company with operations in the U.S., to China's Grandland Holdings Group was scrapped in November after the deal failed to win approval from American authorities. Though the reason was not made clear, the decision is believed to have been related to tensions between Washington and Beijing.
Details of the rules have yet to be hammered out, and a Japanese government source noted that much depends on how Washington implements them.
Excessive restrictions could backfire on the U.S. as well. The public comments on the Commerce Department's proposal included concerns from tech-sector advocates that tougher rules could discourage domestic R&D investment and put a heavier burden on businesses.
The new rules were included in an omnibus defense bill enacted last year and are expected to be finalized as early as spring.