Chinese trade and industry associations describe the US government’s semiconductor bill as an obstacle to global innovation and economic recovery. They further urge the business community to take steps to protect their interests and mitigate the impact of the new bill.
Signed on Tuesday, the US Chips and Science Act aims, among other things, to stimulate the semiconductor industry in the United States. The text provides $52.7 billion in grants and funds to strengthen the country’s footprint in emerging sectors, including nanotechnology, quantum computing and artificial intelligence (AI).
After US President Joe Biden signed the bill this week, various market participants announced their intention to invest. According to the Biden administration, these include the injection of $40 billion per micron into the manufacture of memory chips, which is expected to create up to 40,000 jobs and increase the United States’ market share in the production of memory chips from less than 2% to 10% over the next 10 years.
Cementing country leadership
Qualcomm and GlobalFoundries also unveiled a new partnership to invest $4.2 billion in the expansion of GlobalFoundries’ chip manufacturing facility in New York. Qualcomm said it will increase its domestic semiconductor production by 50% over the next five years.
In defending the role of the new bill, the U.S. government says it will help cement the nation’s leadership in technology that is the “foundation of everything,” from automobiles to defense systems to home appliances. .
“America invented the semiconductor, but today it produces about 10% of the world’s supply and none of the most advanced chips. Instead, we depend on East Asia for 75% of global production,” the White House notes. “The Chips and Science Act will unlock hundreds of billions more in private sector investment in semiconductors across the country, including production critical to national defense and critical sectors. »
The new bill would also allow the United States to maintain and advance its scientific and technological lead, adds the government. Noting that federal investment in R&D was 2% of the nation’s GDP in the mid-1960s, the Biden administration says that figure has fallen to less than 1% in 2020.
“Economic growth and prosperity over the past 40 years has been concentrated in a few coastal regions, leaving far too many communities behind,” says the government, adding that the Chips and Science Act will “unlock opportunities” in science and technology for those who have been left behind.
Unfair US bill for global competition
China, meanwhile, believes the US bill will distort the global chip supply chain and disrupt international trade. Last month, China’s Ministry of Commerce reported that the law contained provisions that restricted the “normal economic, trade and investment” activities of Chinese market participants.
The ministry said it would monitor the law’s implementation and adopt “strong measures” to protect its legitimate rights and interests.
In a joint statement released on Wednesday, the China Council for the Promotion of International Trade and the China Chamber of International Commerce reiterated criticism of the Chinese government, noting that the U.S. bill would stifle global economic recovery and innovation.
China appeals to the WTO
New law serves to bolster U.S. advantage in chip market and triggers unfair competition against ‘any country of concern’, state newspaper reports China Daily.
Chinese trade associations said the bill gives the U.S. government the power to impose changes in the global semiconductor job market, including through subsidies and tax credits. investment in the manufacture of equipment in order to encourage companies to build factories in the United States. This would negatively impact international businesses, including those in China and the United States, Chinese associations said.
They added that such provisions do not comply with the World Trade Organization’s “non-discrimination principles” and that they single out specific countries as primary targets, forcing companies to adjust their global development strategies.
Reduce chip size and improve performance
Trade associations believe that pushing technologies to be produced in the United States would limit equitable participation with international market players. They further urged businesses around the world to come together to mitigate the impact of the US bill and to adopt measures if necessary to protect their legitimate rights and interests.
In its memo on the U.S. law, consultancy PwC says grants under the law provide a “necessary cushion” for semiconductor companies to fill talent gaps and diversify their workforces. . These could potentially play a vital role in reducing chip size and power while increasing performance.
However, the funding comes with new geographical restrictions on manufacturing, PwC says, noting that the US bill prohibits companies from using the grants to finance the expansion of chip manufacturing in China and other countries. countries identified as a potential threat to national security.
“Rethinking the global strategy”
The consultancy advises companies willing to use the grants to assess their global operations and be alert to key issues at stake, including ensuring that their global R&D and manufacturing activities comply with restrictions geographies of the law. They may also need to identify new partners in their supply chain, including for device assembly, testing and packaging, and whether it would be more cost-effective to expand their manufacturing capacity in the United States. United rather than establishing foundry partnerships.
For PwC, “The Chip Act may present an opportunity for semiconductor companies, but realizing its potential will require rethinking the overall strategy as well as a plan for digital transformation, management of capital projects and financial planning. Geopolitical uncertainty, combined with recent dramatic changes in the market, requires companies to carefully assess their place in the semiconductor value chain and how they can improve their position.”
Source: ZDNet.com