US Senate eyes tightened restrictions on Chinese semiconductors

The Democratic leader of the U.S. Senate urged lawmakers on Monday to back his proposal to bar the US government from doing business with companies that use semiconductors made by producers the Pentagon considers Chinese military contractors, reported Reuters late Monday.

The news quotes Senator Chuck Schumer as he speaks on the Senate restart after the Thanksgiving holiday recess.

“If American business wants the federal government to buy their products or services, they shouldn't be using the kind of Chinese-made chips that, because of Chinese government involvement, put our national security at risk," said Senator Schumer.

"We need our government and our economy to rely on chips made right here in America,” the diplomat adds.

Key quotes

Schumer and Republican Senator John Cornyn introduced their proposal as an amendment to the National Defense Authorization Act, or NDAA, an annual bill setting policy for the Department of Defense expected to pass the Senate and House of Representatives in December.

As one of the only major pieces of legislation Congress passes every year, the NDAA is closely watched by a broad swath of industry and other interests because it determines everything from purchases of ships and aircraft to pay increases for the troops and how to address geopolitical threats.

Lawmakers also use the bill as a vehicle for a wide range of policy measures. The proposal from Schumer and Cornyn would broaden an existing ban on government use of Chinese chips.

Risk-aversion gets more to watch

The news adds strength to the market’s risk-off mood but gets no major immediate response amid the early hours of the Asian session.

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