Chinese trade associations have described 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.
Enacted on Tuesday, the US Chip and Science Act aims to boost the country’s semiconductor manufacturing industry and spur investment in research and development, science and technology. It includes $52.7 billion in grants and funds aimed at fueling the domestic manufacturing sector and strengthening the country’s footprint in emerging sectors, such as nanotechnology, quantum computing and artificial intelligence (AI). .
Following the signing of the bill by US President Joe Biden this week, various market participants announced their intention to invest in the local market. According to the Biden administration, these included Micron’s $40 billion cash injection into memory chip manufacturing that was expected to create up to 40,000 jobs and boost the U.S. market share of chip production. memory at 10%, compared to less than 2% over the next few years. 10 years.
Qualcomm and GlobalFoundries also unveiled a new partnership that plans to invest $4.2 billion to expand GlobalFoundries’ chip manufacturing facility in New York. Qualcomm said it will increase its domestic semiconductor production by up to 50% over the next five years.
In defending the role of the new bill, the U.S. government said it would help solidify the country’s leadership in technology that was the “basis of everything,” spanning automobiles, defense systems and home appliances.
“America invented the semiconductor, but today produces about 10% of the world’s supply and none of the most advanced chips. Instead, we rely on East Asia for 75% of global production,” the White House said. “The Chips and Science Act will unlock hundreds of billions more in private sector semiconductor investment across the country, including critical national defense production and critical sectors.”
The new bill would also allow the United States to maintain and advance its scientific and technological edge, the government said. Noting that federal investment in R&D was 2% of the nation’s GDP in the mid-1960s, the Biden administration said that figure had fallen to less than 1% by 2020.
“Economic growth and prosperity over the past 40 years has been concentrated in a few areas on the coasts, leaving far too many communities behind,” he said, adding that flea law and science ” would open opportunities” in science and technology for those who had been left behind.
Unfair US Global Competition Bill
China, however, said the US bill would distort the global chip supply chain and disrupt international trade. Last month, China’s Ministry of Commerce said the law contained provisions that restricted the “normal economic, trade and investment” activities of Chinese market participants.
The ministry said it would monitor the implementation of the bill 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.
The new law served to bolster the United States’ advantage in the chip market and sparked unfair competition against “any country of concern”, state-owned newspaper China Daily reported.
Chinese trade associations said the bill gives the U.S. government the power to impose changes in the global semiconductor labor market, particularly through subsidies and investment tax credits. on manufacturing equipment to entice 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 these provisions were not in line with the “non-discrimination principles” of the World Trade Organization and identified specific countries as key targets, forcing companies to adjust their global development strategies.
Trade associations have said that pushing technologies to be produced in the United States would restrict fair participation with international market players. They further urged the global business community to unite and mitigate the impact of the US bill as well as adopt measures where necessary to protect their legitimate rights and interests.
In its memo on the US Chips and Science Act, consultancy PwC said the grants provided under the bill provide a “necessary cushion” for semiconductor companies to fill the talent gap and diversify their business. workforce, as well as to provide opportunities to drive change in digital manufacturing. and relevant workforce skills. These could potentially play a vital role in reducing chip size and power while increasing performance.
However, the funding carried new geographical restrictions on manufacturing, PwC said, noting that the US bill prohibited companies from using the grants to finance the expansion of chip manufacturing in China and other identified countries. as a potential threat to national security.
The consultancy advised companies seeking to tap the grants to assess their global operations and keep in mind the key issues at stake, including ensuring that their global R&D and manufacturing activities comply with the restrictions. geographies of the law. They might also need to identify new partners in their supply chain, including device assembly, testing and packaging, and whether it would be more cost-effective to expand their production capacity to United States, instead of establishing foundry partnerships.
PwC said: “The Chips Act may provide an opportunity for semiconductor companies, but realizing its potential will require rethinking global strategy as well as a plan for digital transformation, capital project management and planning. Geopolitical uncertainty, combined with recent market developments, is forcing companies to carefully assess their place in the semiconductor value chain and how they can improve their position.”