New Senate Permanent Subcommittee on Investigations Majority Staff Report Exposes Failure to Stop U.S. Technology from Fueling Russia's War Machine and China's AI Arms Race

[WASHINGTON, DC] – U.S. Senator Richard Blumenthal (D-CT), Chair of the U.S. Senate Permanent Subcommittee on Investigations (PSI), released a Majority staff report revealing how the Department of Commerce’s Bureau of Industry and Security (BIS) has failed to enforce semiconductor export controls, leading to the continued appearance of American-manufactured technology in Russian weapons used in the war in Ukraine and in China’s Artificial Intelligence systems. PSI’s investigation has uncovered how chronic underfunding has undercut the BIS’s ability to fulfill a key national security function—forcing the agency to rely on laughably outdated technology to trace increasingly sophisticated distribution networks. Today’s report stresses the need for additional resources and enforcement action to strengthen our national security and protect against diversion of U.S.-made technology by Russia and China.

“Our present sanction system is a sieve—enabling an illicit flow of technology to Russia that fuels its murderous war on Ukraine," said Blumenthal. "An aggressive crackdown is urgent to make export controls effective against both Russia and China. Lack of resources and effort make current controls a mockery. My PSI investigation calls for an overhaul of sanctions enforcement to protect our national security and technological dominance. I’m calling on the Department of Commerce to take immediate action and crack down on the companies allowing U.S.-made semiconductors to power Russian weapons and Chinese ambition.”

In September 2023, PSI initiated an inquiry to better understand the prevalence of American-manufactured microchips in Russian weapons systems despite export controls implemented to block Russia from accessing U.S. technology. Earlier this year, PSI Majority staff released a report revealing the U.S.-based semiconductor manufacturers’ laissez-faire attitude toward export control compliance. Today, PSI is releasing its final Majority staff report in the Subcommittee’s inquiry into the U.S. technology fueling Russia’s war machine. A summary of PSI’s key findings is below.

Congress has not provided BIS with adequate funding to fulfill its mission.

BIS’s workload and responsibilities tied to national security have drastically increased since 2010, but its funding has remained mostly stagnant.

BIS lacks funding to conduct enough international end-use checks, a critical tool in enforcing export controls. This has resulted in limited end-use checks in countries that (1) are known to have entities engaged in transshipment of semiconductors to Russia, and (2) were identified in the Subcommittee’s September 10, 2024 report as having substantial increases in imports of U.S.-manufactured semiconductors in 2022 and 2023.

BIS’s core IT systems were created in 2006 and have received only patchwork fixes in the nearly two decades since. BIS cannot afford the modern IT infrastructure needed to analyze the full range of data available to combat efforts at export control diversion.

BIS has failed to fully use its existing authority to enforce export controls.

The Export Administration Regulations (EAR) and Export Control Reform Act of 2018 (ECRA) give BIS robust and unique powers to implement and enforce export controls. Despite its significant authority, BIS does not require that semiconductor companies’ export control programs contain any specific components.

BIS has never brought significant penalties against companies for violating export controls even when companies knew there was a high probability that the transaction breached or could lead to a breach of the law.

In a letter to Commerce Secretary Raimondo, Blumenthal referred PSI’s findings and recommendations to the agency and urged BIS to take immediate enforcement action. In his letter, Blumenthal also called on the agency to take steps that ensure these efforts continue in the next administration. Today’s report and letter underscoring the consequences of an underfunded and weakened BIS come as the incoming Trump administration eyes across agency budget cuts. Blumenthal’s letter to Secretary Raimondo is available here. The full staff report detailing PSI’s findings is available here.

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