CHINA WATCHU.S. Moves to Keep Advanced Semiconductor Technology Out of China
Companies that accept U.S. funding under the CHIPS Act — a plan to build up America’s computer chip-making capacity — will be barred from establishing advanced fabrication facilities in China for 10 years. The CHIPS Act is a response not just to the computer chip shortage that snarled global supply chains during the pandemic but also to the perceived national security threat that a lack of domestic semiconductor manufacturing presents.
Companies that accept U.S. funding under a plan to build up America’s computer chip-making capacity will be barred from establishing advanced fabrication facilities in China for 10 years, the administration of President Joe Biden announced this week.
The Commerce Department rolled out its plan to distribute $50 billion provided by the CHIPS Act, which Biden signed into law last month. In an appearance at the White House on Tuesday, Commerce Secretary Gina Raimondo said the rules include specific language on transferring technology to China.
“Companies who receive CHIP funds can’t build leading-edge or advanced technology facilities in China for a period of 10 years,” she said. “Companies who receive the money can only expand their mature node factories in China to serve the Chinese market.”
Mature node factories refer to semiconductor fabrication facilities that only produce older technology that is already widely available.
Raimondo reminded her audience of the semiconductor supply shortage during the first years of the COVID-19 pandemic, saying, “We saw the impact of the chip shortage on American families when car prices drove a third of inflation because of lack of chips, factory workers were furloughed, household appliances were often unavailable, all because of a lack of semiconductors.”
“With this funding, we’re going to make sure that the United States is never again in a position where our national security interests are compromised or key industries are immobilized due to our inability to produce essential semiconductors here at home,” she said.
Low U.S. Capacity
The CHIPS Act is a response not just to the computer chip shortage that snarled global supply chains during the pandemic but also to the perceived national security threat that a lack of domestic semiconductor manufacturing presents.
According to the Commerce Department, the U.S. consumes 25% of the world’s most advanced computer chips but does not produce any of them. As for less advanced chips, the U.S. consumes 30% but manufactures only 13%.
Because advanced chips are used not only in consumer goods but in weapons systems and other technology important to national security, the federal government worries that global adversaries could choke off supply in the event of a conflict.
For example, a large percentage of the chips the U.S. imports come from Taiwan, which has come under increasingly serious threat from China, whose government claims the island nation as part of its country.
