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With New Crackdown, Biden Wages Global Campaign on Chinese Technology

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With New Crackdown, Biden Wages Global Campaign on Chinese Technology

WASHINGTON — In conversations with American executives this spring, high officers within the Biden administration revealed an aggressive plan to counter the Chinese language navy’s speedy technological advances.

China was utilizing supercomputing and synthetic intelligence to develop stealth and hypersonic weapons programs, and to attempt to crack the U.S. authorities’s most encrypted messaging, based on intelligence experiences. For months, administration officers debated what they might do to hobble the nation’s progress.

They noticed a path: The Biden administration would attempt to use U.S. affect over world expertise and provide chains to attempt to choke off China’s entry to superior chips and chip manufacturing instruments wanted to energy these skills. The aim was to maintain Chinese language entities that contributed to potential threats far behind their rivals in the USA and in allied nations.

The trouble, at least what the People had carried out towards Soviet industries through the Chilly Warfare, gained momentum this yr as the USA examined highly effective financial instruments towards Russia as punishment for its invasion of Ukraine, and as China broke limitations in technological growth. The Russian offensive and Beijing’s navy actions additionally made the opportunity of a Chinese language invasion of Taiwan appear extra actual to U.S. officers.

The administration’s issues about China’s tech ambitions culminated final week within the unveiling of essentially the most stringent controls by the U.S. authorities on expertise exports to the nation in a long time — a gap salvo that might ripple by way of world commerce and will frustrate different governments and firms outdoors China.

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In a speech on Wednesday on the administration’s nationwide safety technique, Jake Sullivan, the nationwide safety adviser, talked a few “small yard, excessive fence” for vital applied sciences.

“Choke factors for foundational applied sciences should be inside that yard, and the fence must be excessive as a result of these rivals shouldn’t be in a position to exploit American and allied applied sciences to undermine American and allied safety,” he mentioned.

This account of how President Biden and his aides determined to wage a brand new world marketing campaign towards China, which incorporates beforehand unreported particulars, relies on interviews with two dozen present and former officers and business executives. Most spoke on the situation of anonymity to debate deliberations.

The measures had been notably notable given the Biden administration’s desire for saying insurance policies in tandem with allies to counter rival powers, because it did with sanctions towards Russia.

With China, the administration spent months in discussions with allies, together with the Dutch, Japanese, South Korean, Israeli and British governments, and tried to steer a few of them to subject restrictions alongside the USA.

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However a few of these governments have been hesitant to chop off necessary commerce with China, one of many world’s largest expertise markets. So the Biden administration decided to act alone, with out public measures from allies.

Gregory C. Allen, a former Protection Division official who’s now on the Middle for Strategic and Worldwide Research, mentioned the transfer got here after session with allies however was “basically unilateral.”

“In weaponizing its dominant choke-point positions within the world semiconductor worth chain, the USA is exercising technological and geopolitical energy on an unimaginable scale,” he wrote in an evaluation.

The package deal of restrictions permits the administration to chop off China from sure superior chips made by American and overseas firms that use U.S. expertise.

U.S. officers described the choice to push forward with export controls as a present of management. They mentioned some allies needed to impose comparable measures however feared retaliation from China, so the principles from Washington that embody overseas firms did the laborious work for them.

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Different guidelines bar American firms from promoting Chinese language companies tools or parts wanted to fabricate superior chips, and prohibit People and U.S. firms from giving software program updates and different companies to China’s cutting-edge chip factories.

The measures don’t instantly limit overseas makers of semiconductor tools from promoting merchandise to China. However consultants mentioned the absence of the American tools would most probably impede China’s nascent business for making superior chips. Ultimately, although, that leverage may fade as China develops its personal key manufacturing applied sciences.

Some firms have chafed on the thought of shedding gross sales in a profitable market. In a name with traders in August, an govt at Tokyo Electron in Japan mentioned the corporate was “very involved” that restrictions may forestall its Chinese language prospects from producing chips. ASML, the Dutch tools maker, has expressed criticisms.

Utilized Supplies, an American tools maker, this week slashed its outlook for its income and revenue; TSMC, a Taiwanese chip maker, minimize its forecasts for capital expenditure. Each firms mentioned demand for semiconductor merchandise was set to flag.

Chinese language officers referred to as the U.S. restrictions a big step aimed toward sabotaging their nation’s growth. The transfer may have broad implications — for instance, limiting advances in synthetic intelligence that propel autonomous driving, video suggestion algorithms and gene sequencing, in addition to quashing China’s chip-making business.

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What we think about earlier than utilizing nameless sources. Do the sources know the knowledge? What’s their motivation for telling us? Have they proved dependable previously? Can we corroborate the knowledge? Even with these questions glad, The Instances makes use of nameless sources as a final resort. The reporter and no less than one editor know the id of the supply.

China may reply by punishing overseas firms with operations there. And the best way Washington is imposing the principles may pressure U.S. alliances, some consultants say.

“Sanctions that put the USA at odds with its allies and companions as we speak will each undercut their effectiveness and make it tougher to enroll a broad coalition of states in U.S. deterrence efforts,” mentioned Jessica Chen Weiss, a professor of presidency at Cornell College and a latest State Division official.

Others have argued the strikes didn’t come quickly sufficient. For years, U.S. intelligence experiences warned that American expertise was feeding China’s efforts to develop superior weapons and surveillance networks that police its residents.

Final October, the intelligence group started highlighting the dangers posed by Chinese language advances in synthetic intelligence, quantum computing and semiconductors in conferences with business and authorities officers.

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Mr. Sullivan and different officers started pushing to curb gross sales of semiconductor expertise, based on present and former officers and others aware of the discussions.

However some officers, together with Commerce Secretary Gina Raimondo and her deputies, needed to first safe the cooperation of allies. Beginning late final yr, they mentioned in conferences that by performing alone, the USA risked harming its firms with out doing a lot to cease Chinese language companies from shopping for necessary expertise from overseas rivals.

Even because the Trump administration took some aggressive actions towards Chinese language expertise, like barring worldwide shipments to Huawei, it started quiet diplomacy on semiconductor manufacturing tools. U.S. officers talked with their counterparts in Japan after which the Netherlands — nations the place firms make vital instruments — on limiting exports to China, mentioned Matthew Pottinger, a deputy nationwide safety adviser within the Trump administration.

Biden administration officers have continued these talks, however some negotiations have been tough. U.S. officers spent months making an attempt to steer the Netherlands to stop ASML from promoting older lithography machines to Chinese language semiconductor firms, however they had been rebuffed.

U.S. officers carried out separate negotiations with South Korea, Taiwan, Israel and Britain on proscribing the sale and design of chips.

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Outdoors of the diplomacy, there was growing proof {that a} instrument the USA had used to limit China’s entry to its expertise had severe flaws. Below President Donald J. Trump, the USA added tons of of firms to a so-called entity listing that prohibited American firms from promoting them delicate merchandise with no license.

However every itemizing was tied to a selected firm identify and tackle, making it comparatively straightforward to evade the restrictions, mentioned Ivan Kanapathy, a former China director for the Nationwide Safety Council.

Present and former U.S. officers suspect the Chinese language navy and beforehand sanctioned Chinese language firms, together with Huawei, have tried to achieve entry to restricted expertise by way of entrance firms. Huawei declined to remark.

Biden officers additionally believed the restrictions issued by the Trump administration towards Semiconductor Manufacturing Worldwide Company, a serious Chinese language chip maker referred to as SMIC, had been watered down by business and had been permitting too many gross sales to proceed, individuals aware of the matter mentioned.

In a name with heads of American semiconductor tools makers in March, Mr. Sullivan mentioned that the USA was now not glad with the established order with China, and that it was searching for to freeze Chinese language expertise, mentioned one govt aware of the dialogue.

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Mr. Sullivan, who had dialed into the decision alongside Ms. Raimondo and Brian Deese, the director of the Nationwide Financial Council, instructed executives from KLA Company, Utilized Supplies and Lam Analysis that guidelines proscribing tools shipments to China can be completed with allies, the chief mentioned.

A senior administration official mentioned the measures issued on Friday did mirror understandings reached with U.S. allies.

As negotiations with allied governments continued, consultants on the Commerce, Protection, Power and State Departments spent months poring over spreadsheets itemizing dozens of semiconductor instruments made by U.S. firms to find out which may very well be used for superior chip manufacturing and whether or not firms in Japan and the Netherlands produced comparable tools.

Then in July got here alarming information. A report emerged that SMIC had cleared a serious technological hurdle, producing a semiconductor that rivaled some advanced chips made in Taiwan.

The achievement prompted an explosion of dissatisfaction within the White Home and on Capitol Hill with U.S. efforts to restrain China’s technological development.

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The Biden administration took motion in August to clamp down on China’s semiconductor business, sending letters to tools producers and chip makers barring them from promoting sure merchandise to China.

On Friday, the administration issued the ‌guidelines with world attain.

Corporations instantly started halting shipments to China. U.S. officers have mentioned they are going to subject licenses on a case-by-case foundation in order that firms from the USA and allied nations — like Intel, Samsung and SK Hynix — can ship expertise to their China-based factories. SK Hynix, based mostly in South Korea, introduced on Tuesday that the U.S. authorities had approved it to produce tools and objects to its amenities in China for one yr with out further licensing.

The controls may very well be the start of a broad assault by the U.S. authorities, Mr. Pottinger mentioned.

“The Biden administration understands now that it isn’t sufficient for America to run sooner — we additionally must actively hamper the P.R.C.’s ambitions for tech dominance,” he mentioned, referring to the Folks’s Republic of China. “This marks a severe evolution within the administration’s considering.”

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Julian Barnes and David McCabe contributed reporting.

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Albertsons to pay $3.9 million over allegations it overcharged, lied about weight of groceries

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Albertsons to pay .9 million over allegations it overcharged, lied about weight of groceries

Grocery titan Albertsons will pay $3.9 million to resolve a civil law enforcement complaint alleging that it ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California, authorities said Thursday.

According to the complaint, groceries sold by Albertsons Cos. — including produce, meats, baked goods and other items — had less product in the package than indicated on the label. The company also is accused of charging customers prices higher than its lowest advertised price.

“False advertising preys on consumers, who are already facing rising costs, and unfairly disadvantages companies that play by the rules,” L.A. County Dist. Atty. George Gascón said. “This kind of corporate conduct is especially egregious when it comes to essential groceries, as Californians rely on accurate advertised prices to budget food for their families.”

The case was filed in Marin County Superior Court in partnership with the consumer protection units of the district attorney’s offices of Los Angeles, Marin, Alameda, Sonoma, Riverside, San Diego and Ventura counties.

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The settlement will be divided among the seven counties and used to support future enforcement of consumer protection laws, according to the Marin County district attorney’s office. None of the money will be paid back to consumers.

The fine comes just over a year after the same company was ordered to pay $3.5 million for selling expired over-the-counter drug products. The company is also currently fighting a federal antitrust lawsuit that seeks to block its planned merger with grocery giant Kroger Inc.

Albertsons Cos. operates 589 Albertsons, Safeway and Vons stores in California. The company did not admit wrongdoing. It cooperated with the investigation and has taken steps to correct the violations, according to the L.A. County district atttorney’s office.

In a statement on the settlement, the company said it takes the matter seriously and is committed to ensuring its customers can shop with confidence.

“We have taken steps to ensure our price accuracy guarantee is more visible to customers by posting signage at multiple locations at the front of our stores,” the company stated. “We have conducted additional comprehensive training for associates to reinforce the importance of price accuracy and customer transparency. Additionally, we have enhanced price tracking systems to better ensure real-time accuracy at stores.”

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Prosecutors in the lawsuit alleged that the company failed to implement a price accuracy policy ordered by a court in 2014.

The policy requires that customers who are overcharged for an item either receive the item for free or receive a $5 gift card, depending on which option is worth more. It is designed to encourage customers to immediately report false advertising.

Under the judgment reached Thursday, the grocery giant must implement this policy and ensure staff are properly trained to place accurate weight labels on products.

The serial overcharging was discovered through inspections by Marin County’s Department of Agriculture, Division of Weights and Measures and its counterparts across the state.

“We could not have achieved this result without the outstanding work of our Weights and Measures inspectors as well as vigilant consumers,” said Deputy Dist. Atty. Andres Perez, who prosecuted the case for Marin County.

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For the next three years, Albertsons Cos. is required to hire an independent auditor to ensure it is complying with the terms of the judgment.

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Disney faces class action lawsuit over employee data breach

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Disney faces class action lawsuit over employee data breach

Walt Disney Co. has been hit with a class action lawsuit accusing the Burbank-based entertainment giant of negligence, breach of implied contract and other misconduct in connection with a massive data breach that occurred earlier this year.

Plaintiff Scott Margel submitted the complaint on Thursday in Los Angeles County Superior Court against Disney and Disney California Adventure. The 32-page document also accuses the company of violating privacy laws by not doing enough to prevent or notify victims of the extent of the leak.

The class members, estimated to number in the thousands, are described in the complaint as individuals who gave “highly sensitive personal information” to Disney in connection with their employment at the company — information that was allegedly compromised in the breach.

Representatives of Disney did not immediately respond Friday to The Times’ request for comment.

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The lawsuit cites an article published in September by the Wall Street Journal, which reported that a hacking group known as NullBulge publicly released data spanning more than 18,800 spreadsheets, 13,000 PDFs and 44 million internal messages sent via the workplace communication platform Slack.

According to the Journal, the compromised Slack messages contained sensitive information belonging to Disney cruise employees, including passport numbers, visa details, birthplaces and physical addresses; at least one spreadsheet listed the names, addresses and phone numbers of some Disney Cruise Line passengers. The publication later reported that Disney planned to stop using Slack after the breach.

The plaintiff and class members “remain, even today, in the dark regarding which particular data was stolen, the particular malware used, and what steps are being taken, if any, to secure their [personal information] going forward,” the complaint reads.

The plaintiff and class members “are, thus, left to speculate as to where their [data] ended up, who has used it and for what potentially nefarious purposes.”

In July, NullBulge said that it had leaked roughly 1.2 terabytes of Disney data in rebuke of the company’s treatment of artists, “approach to AI” and “pretty blatant disregard for the consumer.” The self-proclaimed hacktivists told CNN that they were able to penetrate Disney’s system thanks to “a man with Slack access who had cookies.”

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A Disney spokesperson said in a statement at the time that the company was “investigating this matter.”

Margel is demanding that Disney take steps to reinforce its security system and educate class members about the risks associated with the breach. The plaintiff is also seeking unspecified damages and a jury trial.

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Rivian cuts production forecast, citing supply chain issue; its stock dips

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Rivian cuts production forecast, citing supply chain issue; its stock dips

Electric vehicle maker Rivian saw its shares dip Friday after the Irvine-based company cut its production targets amid ongoing supply issues.

Citing a shortage of a component used to build its electric pickups, sport utility vehicles and vans, Rivian said production could drop as much as 18% this year at its lone U.S. assembly plant.

Rivian did not specify the part that is in low supply but noted that the shortage has become more acute in recent weeks.

The company now forecasts its full-year production will be between 47,000 and 49,000 vehicles, down from an earlier estimate of 57,000. During the most recent quarter, Rivian produced 13,157 vehicles and delivered 10,018, falling short of analysts’ expectations.

Shares of Rivian ended the day at $10.44, down 3.2%. The company’s stock has been battered since the start of the year, falling by more than 50% amid underwhelming financial reports. In the second quarter this year, Rivian posted a net loss of $1.46 billion compared with a loss of about $1.12 billion during the same period a year earlier. The company is scheduled to announce its third-quarter earnings next month.

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Rivian received a lifeline in June when Volkswagen agreed to a massive investment in the company that is expected to total $5 billion. Rivan has nonetheless continued to struggle in the face of dropping demand for electric vehicles and other supply chain issues that forced the company to pause its production of commercial vans for Amazon.com in August.

Early this year, the automaker announced a 10% cut in its workforce that sent stocks plummeting 25% in one day. The pool of interested wealthy buyers who don’t already own an electric vehicle is shrinking, analysts said, while the broader market weighs the advantages and feasibility of switching to electric.

The average car buyer is not likely to be able to afford a Rivian vehicle, and concerns remain about charging infrastructure and the distance vehicles can drive on a single charge. Rivian’s R1T electric pickup truck starts at around $70,000; its R1S SUV starts at nearly $75,000.

With sleek design and outdoorsy features, Rivian’s vehicles garnered much attention from analysts and attracted investors such as Amazon and Volkswagen. The company exceeded expectations during its initial public offering of stock in 2021, ending its first day of trading valued at nearly $88 billion.

The production issues announced this week could get in the way of Rivian’s goal of achieving positive gross profits by the fourth quarter of this year. According to analysts, the company’s gross margins are expected to remain in negative territory in the final three months of 2024.

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