China May Have Head Start on Chip Making Due to Trade War
November 19, 2021–This week, the U.S. Congress advanced legislation that would boost the U.S.-production of semiconductors. It comes amid concern that while Western industry feels the pinch of the global semiconductor shortage, the Chinese government may be better positioned than others to ramp up production.
Last year, the Trump Administration blocked semiconductor sales by American companies and the companies with which they do business to China in the name of national security.
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China’s Government Produces Chips
Washington, D.C.-based data analysis firm Sayari Graph reports the Chinese government owns 13 percent of that nation’s semiconductor firms. There are more than 8,000 such firms there, with more than 35,000 companies in their ownership networks, according to the research.
‘Made in China’ Plan
The increased push for home-grown semiconductors is also part of Chinese President XI Jinping’s “Made in China 2025” economic plan, which calls for China to make 70 percent of its own semiconductors by then. The investment in microchips is not done by the central government alone. Rather, provincial, prefectural, and city-level governments are also active investors.
US-Based Manufacturing
By comparison, U.S. lawmakers have introduced several bills in Congress that include different types of support for U.S.-based semiconductor manufacturing. President Joe Biden’s infrastructure plan had included $50 billion in chip manufacturing incentives, but there are no quick solutions to the chip scarcity. That is now moving in Congress separately.
According to the Semiconductor Industry Association and the Boston Consulting Group, the manufacturing of chips within the United States accounts for only 12 percent of the industry. Meanwhile, Asia is producing 75 percent of the world’s semiconductors.
Congress Moves CHIPS Bill Into House-Senate Conference
This week, the U.S. House and Senate advanced legislation to fund up to $52 billion in semiconductor manufacturing, research, and design. The CHIPS for America Act is included in the Senate-passed U.S. Innovation and Competition Act, S.1260. It now moves into a conference committee where lawmakers will settle differences.
John Neuffer, president and CEO of the Semiconductor Industry Association, cheered the U.S. lawmakers moving the legislation.
“Semiconductors make possible the technologies that drive our economy, national security, and innovation leadership. We are hopeful today’s agreement between leaders in the House and Senate paves the way for swift approval of competitiveness legislation that contains $52 billion to fund the CHIPS Act,” he said in a release.
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