The technology front before the summit: a model distillation accusation, China's memory breakthrough and phase-two chip tariffs

A new front: the models themselves

As reported by Nextgov and The Register, the NSA, CISA and the FBI issued a joint advisory on 8 September accusing DeepSeek, Moonshot AI, Alibaba, MiniMax, StepFun and Z.AI of training their own models since 2024 by extracting billions of tokens from US companies' models through fake accounts and intermediary services. China's Ministry of Foreign Affairs rejected the accusations, and the Ministry of Commerce announced that it would respond.

The advisory shows that technology competition has widened from access to chips and lithography to the outputs of the models. While hardware controls can be enforced through physical shipments, controlling model outputs depends on commercial API access; US companies were therefore advised to degrade the responses to suspicious accounts without alerting them. Coming ahead of the summit, the advisory also carries the message that Washington has no intention of loosening chip controls.

Memory: progress despite controls

According to Korea JoongAng Daily, CXMT, China's largest DRAM maker, has begun small-scale production of HBM3E, the version of high-bandwidth memory used in AI accelerators; Alibaba's T-Head unit and Cambricon are testing the product. According to the report, which draws on SemiAnalysis, yield on the previous-generation HBM3 is around 25 per cent. Samsung, SK Hynix and Micron, meanwhile, are at the HBM4 stage.

According to Seoul Economic Daily, CXMT's share of global DRAM revenue reached 10 per cent for the first time in the second quarter of 2026. China's 129.8 per cent rise in semiconductor exports in August also points to growing production capacity. The picture shows that export controls have slowed China rather than stopped it, and have shifted competition to areas such as memory.

Taiwan and the tariff bargaining

TSMC's August revenue rose 53.3 per cent year on year to 514.81 billion New Taiwan dollars. US Commerce Secretary Lutnick confirmed phase-two chip tariffs on 2 September; he said companies manufacturing in the US would pay no duties while those producing elsewhere would pay, but announced no rate or timetable. According to TechTimes, a duty-free import ratio linked to Arizona capacity is envisaged for TSMC.

According to Brownstein's analysis of 9 September, a one-year extension of the truce is the most likely outcome of the summit, but no loosening of chip export controls or approval for Nvidia's advanced chips is expected; the 14 billion dollar arms sale to Taiwan also remains on hold. Taiwan announced a record defence budget of 1 trillion New Taiwan dollars for 2027. Taiwan's strongest card is its semiconductor capacity; its greatest vulnerability is the possibility of becoming a bargaining item in a US–China rapprochement.

Legal ground and bargaining chips

The legal ground for tariff bargaining has also shifted. According to tracking by the Trade Compliance Resource Hub and Brownstein's analysis, the US Supreme Court struck down IEEPA-based tariffs on 20 February 2026 and Section 122 tariffs expired on 24 July; a 12.5 per cent tariff applies to China under Section 301, and the 100 per cent tariff on port cranes has been deferred to 10 November. This has narrowed the administration's room to use the tariff tool and brought sectoral national security tariffs to the fore.

China's strongest card is the suspension of rare earth export controls; the US card is access to chips and models. According to a report citing Bloomberg, the sides are discussing reciprocal tariff cuts on around 30 billion dollars of trade. Keeping technology restrictions outside this bargaining indicates that technology decoupling will continue even if the trade truce is extended.

What to watch

Watch whether the joint statement of the 24 September summit mentions AI and chip controls, the rate and scope of phase-two chip tariffs, new data on CXMT's HBM3E yield, and whether China responds concretely to the distillation advisory. No verified new regulation in biosecurity was found in the past ten days; the report that rules on a DNA synthesis screening framework will take effect in October could not be verified from a primary source.