Semiconductor sale restrictions hurting 'chip alliance' members

A year after the Joe Biden administration took the first step toward restricting semiconductor sales to China, it has begun drafting additional measures. But progress has slowed down in recent months as US chip companies are telling the government that cutting sales to China would ruin their business and derail the government's plan to build new semiconductor factories in the United States.

Since July, the world's three largest chipmakers — Nvidia, Intel and Qualcomm — have stressed that the crackdown on China will have unintended consequences. In their meetings with officials including Secretary of State Antony Blinken and Commerce Secretary Gina Raimondo, the heads of those companies questioned the White House's national security acumen and urged leaders in Washington to reconsider additional chip restrictions against China. They stressed that such moves could accelerate the development of an independent chip industry in China and pave the way for a world dominated by chips designed in China rather than the US.

Their stance has irked some national security experts who think it is distasteful that the companies are challenging the White House so soon after the CHIPS and Science Act was passed and a subsidy of $50 billion was promised to the industry.

The warnings from these companies reflect the tension between national security concerns and commercial interests in the US, and highlight an inevitable dilemma for the Biden administration. The economic interdependence of the US and China goes back decades, meaning any move by Washington to confront Beijing risks hurting the interests of stakeholders in the US itself.

China accounts for about a third of the global semiconductor market, and this explains why the three US chip giants have warned that losing the revenue from the Chinese market could force them to cut funding for technology development, jobs and spending on semiconductor plants in Arizona, Ohio and New York.

The US chip industry's losses have been mounting and countermeasures by China are making it worse.

- REFERENCE NEWS