The United States “won’t tolerate” China’s effective ban on purchases of Micron Technology MU.O memory chips and is working closely with allies to address such “economic coercion,” U.S. Commerce Secretary Gina Raimondo said Saturday.

Raimondo told a news conference after a meeting of trade ministers in the U.S.-led Indo-Pacific Economic Framework talks that the U.S. “firmly opposes” China’s actions against Micron.

These “target a single U.S. company without any basis in fact, and we see it as plain and simple economic coercion and we won’t tolerate it, nor do we think it will be successful.”

China’s cyberspace regulator said May 21 that Micron, the biggest U.S. memory chip maker, had failed its network security review and that it would block operators of key infrastructure from buying from the company, prompting it to predict a revenue reduction.

The move came a day after leaders of the G7 industrial democracies agreed to new initiatives to push back against economic coercion by China — a decision noted by Raimondo.

“As we said at the G7 and as we have said consistently, we are closely engaging with partners addressing this specific challenge and all challenges related to China’s non-market practices.”

Raimondo also raised the Micron issue in a meeting Thursday with China’s Commerce Minister, Wang Wentao.

She also said the IPEF agreement on supply chains and other pillars of the talks would be consistent with U.S. investments in the $52 billion CHIPS Act to foster semiconductor production in the United States.

“The investments in the CHIPS Act are to strengthen and bolster our domestic production of semiconductors. Having said that, we welcome participation from companies that are in IPEF countries, you know, so we expect that companies from Japan, Korea, Singapore, etc, will participate in the CHIPS Act funding,” Raimondo said.
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China and South Korea have agreed to strengthen dialog and cooperation on semiconductor industry supply chains, amid broader global concerns over chip supplies, sanctions and national security, China’s commerce minister said.

Wang Wentao met with South Korean Trade Minister Ahn Duk-geun on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in Detroit, which ended Friday. 

They exchanged views on maintaining the stability of the industrial supply chain and strengthening cooperation in bilateral, regional and multilateral fields, according to a statement from the Chinese Ministry of Commerce on Saturday.

Wang also said that China is willing to work with South Korea to deepen trade ties and investment cooperation.

However, a South Korean statement on the same meeting did not mention chips, instead saying the country’s trade minister had asked China to stabilize the supply of key raw materials — and asked for a predictable business environment for South Korean companies in China.

“The South Korean side expressed that communication is needed between working-level officials over all industries,” not just for semiconductors, a source with knowledge of the matter told Reuters.

The source declined to be identified because they were not authorized to speak to the media.

South Korea is in the crosshairs of a tit-for-tat row between the United States and China over semiconductors.

China’s cyberspace regulator said last week that Micron had failed its network security review and that it would block operators of key infrastructure from buying from the company.

The U.S. has pushed for countries to limit China’s access to advanced chips, citing a host of reasons including national security.

About 40% South Korea’s chip exports go to China, according to trade ministry data, while U.S. technology and equipment are necessary for South Korean chipmakers Samsung Electronics and SK Hynix.
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As concerns grow over increasingly powerful artificial intelligence systems like ChatGPT, the nation’s financial watchdog says it’s working to ensure that companies follow the law when they’re using AI.

Already, automated systems and algorithms help determine credit ratings, loan terms, bank account fees, and other aspects of our financial lives. AI also affects hiring, housing and working conditions.

Ben Winters, senior counsel for the Electronic Privacy Information Center, said a joint statement on enforcement released by federal agencies last month was a positive first step.

“There’s this narrative that AI is entirely unregulated, which is not really true,” he said. “They’re saying, ‘Just because you use AI to make a decision, that doesn’t mean you’re exempt from responsibility regarding the impacts of that decision. This is our opinion on this. We’re watching.’”

In the past year, the Consumer Finance Protection Bureau said it has fined banks over mismanaged automated systems that resulted in wrongful home foreclosures, car repossessions and lost benefit payments, after the institutions relied on new technology and faulty algorithms.

There will be no “AI exemptions” to consumer protection, regulators say, pointing to these enforcement actions as examples.

Consumer Finance Protection Bureau Director Rohit Chopra said the agency has “already started some work to continue to muscle up internally when it comes to bringing on board data scientists, technologists and others to make sure we can confront these challenges” and that the agency is continuing to identify potentially illegal activity.

Representatives from the Federal Trade Commission, the Equal Employment Opportunity Commission, and the Department of Justice, as well as the CFPB, all say they’re directing resources and staff to take aim at new tech and identify negative ways it could affect consumers’ lives.

“One of the things we’re trying to make crystal clear is that if companies don’t even understand how their AI is making decisions, they can’t really use it,” Chopra said. “In other cases, we’re looking at how our fair lending laws are being adhered to when it comes to the use of all of this data.”

Under the Fair Credit Reporting Act and Equal Credit Opportunity Act, for example, financial providers have a legal obligation to explain any adverse credit decision. Those regulations likewise apply to decisions made about housing and employment. Where AI make decisions in ways that are too opaque to explain, regulators say the algorithms shouldn’t be used.

“I think there was a sense that, ‘Oh, let’s just give it to the robots and there will be no more discrimination,’” Chopra said. “I think the learning is that that actually isn’t true at all. In some ways the bias is built into the data.”

EEOC Chair Charlotte Burrows said there will be enforcement against AI hiring technology that screens out job applicants with disabilities, for example, as well as so-called “bossware” that illegally surveils workers.

Burrows also described ways that algorithms might dictate how and when employees can work in ways that would violate existing law.

“If you need a break because you have a disability or perhaps you’re pregnant, you need a break,” she said. “The algorithm doesn’t necessarily take into account that accommodation. Those are things that we are looking closely at. … I want to be clear that while we recognize that the technology is evolving, the underlying message here is the laws still apply and we do have tools to enforce.”

OpenAI’s top lawyer, at a conference this month, suggested an industry-led approach to regulation.

“I think it first starts with trying to get to some kind of standards,” Jason Kwon, OpenAI’s general counsel, told a tech summit in Washington hosted by software industry group BSA. “Those could start with industry standards and some sort of coalescing around that. And decisions about whether or not to make those compulsory, and also then what’s the process for updating them, those things are probably fertile ground for more conversation.”

Sam Altman, the head of OpenAI, which makes ChatGPT, said government intervention “will be critical to mitigate the risks of increasingly powerful” AI systems, suggesting the formation of a U.S. or global agency to license and regulate the technology.

While there’s no immediate sign that Congress will craft sweeping new AI rules as European lawmakers are doing, societal concerns brought Altman and other tech CEOs to the White House this month to answer hard questions about the implications of these tools.
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State-sponsored Chinese hackers have infiltrated critical U.S. infrastructure networks, the United States, its Western allies and Microsoft said Wednesday while warning that similar espionage attacks could be occurring globally.  

Microsoft highlighted Guam, a U.S. territory in the Pacific Ocean with a vital military outpost, as one of the targets, but said “malicious” activity had also been detected elsewhere in the United States.  

The stealthy attack — carried out by a China-sponsored actor dubbed “Volt Typhoon” since mid-2021 — enabled long-term espionage and was likely aimed at hampering the United States if there was conflict in the region, it said.  

“Microsoft assesses with moderate confidence that this Volt Typhoon campaign is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and Asia region during future crises,” the statement said.  

“In this campaign, the affected organizations span the communications, manufacturing, utility, transportation, construction, maritime, government, information technology, and education sectors.”  

Microsoft’s statement coincided with an advisory released by U.S., Australian, Canadian, New Zealand and British authorities warning that the hacking was likely occurring globally.  

“This activity affects networks across US critical infrastructure sectors, and the authoring agencies believe the actor could apply the same techniques against these and other sectors worldwide,” they said.   

‘Living off the land’    

The United States and its allies said the activities involved “living off the land” tactics, which take advantage of built-in network tools to blend in with normal Windows systems.  

It warned that the hacking could then incorporate legitimate system administration commands that appear “benign”.  

Microsoft said the Volt Typhoon attack tried to blend into normal network activity by routing traffic through compromised small office and home office network equipment, including routers, firewalls and VPN hardware.  

“They have also been observed using custom versions of open-source tools,” Microsoft said.   

Microsoft and the security agencies released guidelines for organizations to try to detect and counter the hacking.  

“It’s what I would term a low and slow cyber activity,” said Alastair MacGibbon, chief strategy officer at Australia’s CyberCX and a former head of the Australian Cyber Security Centre.  

“This is someone wearing a camouflage vest and carrying a sniper rifle. You don’t see them, they’re not there,” he told AFP.  

“When you think about something that can really cause catastrophic harm, it is someone with intent who takes time to get into systems.”  

Once inside, the cyber attackers can steal information, he said. “But it also gives you the ability to carry out destructive acts at a later stage.”   

‘Highly sophisticated’   

A number of other governments had found similar activity since the Volt Typhoon alert was issued, said Robert Potter, co-founder of Australian cybersecurity firm Internet 2.0.  

“I am not sure how communications infrastructure would be at risk from these attacks because those networks are highly resilient and difficult to bring down for more than small intervals,” Potter told AFP.  

“However, the ongoing threat from China-based APT (advanced persistent threat) groups is real.”  

The director of the U.S. Cybersecurity and Infrastructure Security Agency, Jen Easterly, said China had been stealing intellectual property and data worldwide for years.  

“Today’s advisory, put out in conjunction with our U.S. and international partners, reflects how China is using highly sophisticated means to target our nation’s critical infrastructure,” Easterly said.  

China offered no immediate response to the allegations. But it routinely denies carrying out state-sponsored cyber-attacks.   

China in turn regularly accuses the United States of cyber espionage. 
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Beijing’s restrictions on American chipmaker Micron in retaliation to sweeping US chip curbs mark a major step up in its response to Washington’s pressure and could open the door for further measures in the geopolitical standoff, analysts say.   

But they warned President Xi Jinping’s ability to raise the stakes will be limited as he battles to re-energize the world’s number two economy while it struggles to recover from years of zero-Covid-imposed inertia.   

China on Sunday banned the use of Micron’s chips in critical infrastructure projects, which Beijing said posed “major network security risks” that could affect “national security”.   

Washington expressed “serious concerns” over the ruling that came just as leaders of the world’s seven richest nations (G7) signed a statement urging Beijing to end “economic coercion”.   

The move marked a significant shift in China’s response to US measures that have targeted the country’s technology sector, with Gary Ng, a senior economist at Natixis who specializes in the global chip trade, calling it “a landmark case”.   

He emphasized it was China’s first cybersecurity probe into a foreign company since tighter rules were announced in 2021, and a rare instance when the scope of such reviews was expanded to include national security concerns.   

“I wouldn’t be surprised if regulators used these reviews as a tool for retaliation in future” when faced with other geopolitical issues, he said.   

Emily Weinstein, a research fellow at Georgetown University specializing in the US-China tech rivalry, added that the definition of what fell under “critical information infrastructure” was very broad — ranging from online government services and defense to healthcare and water conservation.   

“Technically that could mean that anything qualifies,” she said.   

“China has consistently found national security or other reasons to create protectionist barriers” including mandatory technology transfer agreements, which require companies to store all data locally and requirements for foreign entities to have joint ventures with local partners in several sectors.   

‘Fuel to this fire’    

China began an investigation into Micron in late March, five months after the US unveiled sweeping curbs aimed at cutting off Beijing’s access to high-end chips, chipmaking equipment and software used to design semiconductors.   

“This is clearly part of a tit-for-tat retaliation for what Beijing perceives as Washington’s support of Micron and the US semiconductor industry,” said Paul Triolo, a China tech expert at consultancy Albright Stonebridge.   

Micron was singled out to make a political statement, Triolo said, adding that previous cybersecurity reviews of domestic firms, such as ride-hailing app Didi, focused on data instead of broadening the scope to include national security.   

Washington has banned Chinese chipmakers including Micron rival Yangtze Memory Technologies.   

The announcement came as the G7 nations said they would move to “de-risk, not decouple” from China, while Washington pressures allies to unite in restricting chip equipment exports to China. 

“The strong statement from G7 may have added fuel to this fire,” Ng said.   

However, Xi’s desire to combat what he sees as US hegemony will need to be balanced against the impact such measures would have on the economy.   

According to analysts, Micron — one of the US’s largest memory chipmakers — was an easy target because its semiconductors could be replaced by products from South Korea’s SK Hynix and Samsung.   

But restrictions against other US firms such as Intel and Qualcomm would be much harder to deal with because their technologies are used in consumer goods, including smartphones, that are made in the country and shipped abroad.    

Betting on South Korea     

“The approach of limiting US firms like Micron intends to send a signal that Beijing is willing to bear some pain as it contests with the US,” Ja Ian Chong, an associate professor of political science at the National University of Singapore, said.   

“But Beijing is quite careful to limit costs to itself,” he said, according to Bloomberg News.    

The ban will come down particularly hard on companies offering cloud services or data centers because they use hardware that requires high-end memory chips, according to Toby Zhu, an analyst at market research firm Canalys.   

He told AFP that Micron’s consumer goods products are “completely replaceable” by South Korean and domestic memory chip suppliers.   

And Triolo said Beijing was “betting on switching to South Korean suppliers”.  

However, the White House last month urged South Korean chipmakers not to export to China to fill any gap left by a ban on US semiconductor imports.   

The Netherlands and Japan have already announced their own restrictions on chip exports, following requests from Washington.   

Ng added: “China has been quite cautious not to retaliate too much… because Beijing can’t ramp up domestic capacity quickly to match any shortfall.” 
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Microsoft Corp. said on Wednesday it had uncovered malicious activity by a state-sponsored actor based in China aimed at critical infrastructure organizations in Guam and the United States. 

Microsoft said it assessed with “moderate confidence” that this Volt Typhoon campaign “is pursuing development of capabilities that could disrupt critical communications infrastructure between the United States and Asia region during future crises.” 

Volt Typhoon has been active since mid-2021 and has targeted critical infrastructure organizations in Guam and elsewhere in the United States, the company said.

Guam is home to major U.S. military facilities, including the Andersen Air Force Base, which would be key to responding to any conflict in the Asia-Pacific region. 

Microsoft said it had notified targeted or compromised customers and provided them with information. 

The Chinese embassy in Washington did not immediately respond to a Reuters request for comment. 
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Apple Inc on Tuesday said it has entered a multi-billion-dollar deal with chipmaker Broadcom Inc. to use chips made in the United States. 

Under the multi-year deal, Broadcom will develop 5G radio frequency components with Apple that will be designed and built in several U.S. facilities, including Fort Collins, Colorado, where Broadcom has a major factory, Apple said. 

Broadcom were up 2.2% after the announcement, hitting a record high. The chipmaker is already a major supplier of wireless components to Apple, with about one fifth of its revenue coming from the iPhone maker in its two most recent fiscal year. 

Apple has been steadily diversifying its supply chains, building more products in India and Vietnam and saying that it will source chips from a new Taiwan Semiconductor Manufacturing Co plant under construction in Arizona. 

SEE ALSO: A related video by VOA correspondent Michelle Quinn

The two companies did not disclose the size of the deal, with Broadcom saying only that the new agreements require it to allocate Apple “sufficient manufacturing capacity and other resources to make these products.” 

Broadcom and Apple previously had a three-year, $15 billion agreement that Bernstein analyst Stacy Rasgon said was set to expire in June. He said the development was positive for Broadcom, despite the fact that the two firms did not give a time frame for how long the work will last. 

“It’s good that it removes that overhang,” Rasgon said. “Broadcom has existed over the years with a number of these long-term agreements with Apple. Sometimes they have them and sometimes they don’t.” 

Apple said it will tap Broadcom for what are known as film bulk acoustic resonator (FBAR) chips. The FBAR chips are part of a radio-frequency system that helps iPhones and other Apple devices connect to mobile data networks. 

“All of Apple’s products depend on technology engineered and built here in the United States, and we’ll continue to deepen our investments in the U.S. economy because we have an unshakable belief in America’s future,” Apple CEO Tim Cook said in a statement. 

Apple said it currently supports more than 1,100 jobs in Broadcom’s Fort Collins FBAR filter manufacturing facility. 
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TikTok on Monday filed suit in U.S. federal court to stop the northern state of Montana from implementing an overall ban on the video-sharing app.

The unprecedented ban, set to start in 2024, violates the constitutionally protected right to free speech, TikTok argued in the suit.

“We believe our legal challenge will prevail based on an exceedingly strong set of precedents and facts,” a TikTok spokesperson told AFP.

Montana Governor Greg Gianforte signed the prohibition into law on May 17.

Gianforte said on Twitter that he endorsed the ban in order to “protect Montanans’ personal and private data from the Chinese Communist Party.”

“The state has enacted these extraordinary and unprecedented measures based on nothing more than unfounded speculation,” TikTok contended in its lawsuit.

Five TikTok users last week filed a suit of their own, calling on a federal court to overturn Montana’s ban on the app, arguing that it violates their free speech rights.

Both suits filed against Montana argue the state is trying to exercise national security power that only the federal government can wield and is violating free speech rights in the process.

TikTok called on the federal court to declare the Montana ban on its app unconstitutional and block the state from ever putting it into effect.

“Montana can no more ban its residents from viewing or posting to TikTok than it could ban the Wall Street Journal because of who owns it or the ideas it publishes,” the lawsuit filed by TikTok users contends.

The app is owned by Chinese firm ByteDance and is accused by a wide swath of U.S. politicians of being under the tutelage of the Chinese government and a tool of espionage by Beijing, something the company furiously denies.

Montana became the first U.S. state to ban TikTok, with the law set to take effect next year as debate escalates over the impact and security of the popular video app.

A matter of law

The prohibition will serve as a legal test for a national ban of the platform, something that lawmakers in Washington are increasingly calling for.

The Montana ban makes it a violation each time “a user accesses TikTok, is offered the ability to access TikTok, or is offered the ability to download TikTok.”

Each violation is punishable by a $10,000 fine every day it takes place.

Under the law, Apple and Google will have to remove TikTok from their app stores and companies will face possible daily fines.

The prohibition will take effect in 2024 but would be voided if TikTok is acquired by a company incorporated in a country not designated by the United States as a foreign adversary, the law reads.

The cases should move quickly in court, since they center on points of law that don’t require lots of evidence to be gathered, according to University of Richmond law professor Carl Tobias.

“There are very compelling constitutional arguments that favor the plaintiffs,” Tobias said.

“First is free speech, and second is if the ban is justified by national security, that is a matter for the federal government not any individual state.”

The law is the latest skirmish in duels between TikTok and many western governments, with the app already banned on government devices in the United States, Canada and several countries in Europe.
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