The Department of Commerce has initiated a comprehensive review of the United States semiconductor supply chain with a focus on enhancing national security. This response confronts concerns about the reliance on Chinese-sourced semiconductor chips. As part of efforts to secure the supply chain, the review will scrutinize how American companies are acquiring current-generation and mature-node, also known as “legacy,” semiconductors.
Evaluating National Security Risks
The investigation, starting in January, centers on identifying and mitigating potential national security risks arising from China's influence in the semiconductor industry. Commerce Secretary Gina Raimondo highlighted the urgency of addressing this issue, stating that certain practices by Chinese firms aiming to increase their legacy chip production have been potentially worrying, creating unfair competition for U.S. companies.
Strengthening U.S. Competitiveness with Subsidies
In parallel with the survey, the Commerce Department is preparing to allocate nearly $40 billion in subsidies to stimulate domestic semiconductor manufacturing. These strategic subsidies are a cornerstone of the government's effort to revive and bolster U.S. competitiveness in semiconductor technology, ensuring that the defense industrial base remains robust and independent from foreign supply chain vulnerabilities.
The semiconductor industry is crucial for a wide array of modern technologies, from smartphones to advanced computing and military applications. Legacy chips, though not representing the cutting-edge, are essential for numerous everyday products and key defense systems. The focus on the supply of these components signifies recognition from the government on the pivotal role they play in national security.
The review's findings will play a crucial role in informing future policy and investment decisions to secure the semiconductor supply chain. The U.S. is poised to reinforce its position in the global market while addressing security concerns tied to international supply chains and manufacturing dependencies.
The U.S. Battle Against China in the Chip Market
In October, the U.S. government took a firm stance against chip imports to China. The newly instigated rules will supplement the far-reaching U.S restrictions on chip and chipmaking machinery shipments to China, announced last October.
The introduction of the new conditions ensures that AI chips slightly lower than current technological thresholds are blocked while obliging companies to report the shipping of others. The rules are designed to thwart U.S chips and equipment from boosting China's military power. U.S Department of Commerce, responsible for overseeing export control measures, declined to comment on these new regulations.
