President Joe Biden’s administration announced this week that companies accepting US money under plans to boost US computer chip manufacturing capacity will be barred from establishing advanced manufacturing facilities in China for 10 years.

The Commerce Department has rolled out a plan to distribute the $50 billion provided by the CHIPS Act Biden signed into law last month. Commerce Secretary Gina Raimond, who appeared at the White House on Tuesday, said the rule contains specific language on technology transfers to China.

“Companies that receive CHIP funding cannot build cutting-edge or high-tech facilities in China for 10 years,” she said. “Companies receiving money can only expand their mature node factories in China to serve the Chinese market.”

A mature node fab refers to a semiconductor manufacturing facility that only produces older technologies that are already in widespread use.

Raimondo reminded the audience of the semiconductor supply shortages in the first few years of the COVID-19 pandemic, saying: Consumer electronics were often unavailable due to shortages of semiconductors. ”

“This funding will ensure that the United States never again finds itself in a situation where national security interests are undermined and key industries are crippled because we can’t produce essential semiconductors at home. You can,’ she said.

US capacity is low

The CHIPS Act is a response not only to the shortage of computer chips that disrupted global supply chains during the pandemic, but also to the national security threat posed by the lack of domestic semiconductor manufacturing.

According to the Department of Commerce, the United States consumes 25% of the world’s most advanced computer chips, but does not produce any of them. When it comes to less advanced chips, the US consumes 30% of him, but he makes only 13%.

Because advanced chips are used not only in consumer goods, but also in weapons systems and other technologies critical to national security, the federal government has warned that global adversaries could cut off supplies in the event of a conflict. I am concerned that there is

For example, the majority of chips imported by the United States come from Taiwan, which is increasingly under threat from China. The Taiwanese government claims the island nation as part of its own country.

“Unusual” Policy

James A. Lewis, senior vice president and director of the Strategic Technology Program at the Center for Strategic and International Studies (CSIS), told the VOA that the 10-year deadline was an “unusual” policy for the United States and likely It’s an effort to find a middle ground between tech companies and the federal government’s Chinese hawks.

“I can’t think of any other example where we have set such a time limit…it is not the way it is normally done internationally,” he said.

According to Lewis, the Department of Commerce has found itself sandwiched between technology companies, on the one hand, reluctant to completely cut themselves off from one of the world’s largest markets, and Congress and the White House, on the other. rice field. Both lawmakers and President Biden want to stop China from producing cutting-edge semiconductors.

Technology limitations are nothing new

A decade-long ban on manufacturing advanced semiconductor technology in China may be tougher than expected, but US companies are accustomed to facing restrictions on the export of critical technologies.

“U.S. companies will follow U.S. laws. We will continue to sell chips to Chinese buyers in accordance with existing laws,” Doug Barry, vice president of the U.S.-China Business Council, told VOA in an email exchange. “They have long had to apply for an export license to sell certain types of chips, and have stopped selling to certain Chinese companies when required by U.S. law.”

Barry said members of his organization “support a strong indigenous semiconductor industry and strong national security policies.”

“The key to maintaining U.S. competitiveness in critical technologies is to narrow the scope of export and investment controls and to consult regularly with the business community to avoid unintended policy consequences.”

Chinese embassy responds

In response to questions from VOA, the Chinese Embassy in Washington has emailed a response to action from spokesperson Liu Pengyu.

“The Chinese side opposes relevant laws interfering and restricting economic, trade and investment cooperation in the global business community,” he said. “The law contains conditions that restrict the normal investment and trade of related companies to China and the normal China-US/Sci-Tech cooperation. It will disrupt trade, and China is resolutely against it.”

In conclusion, Mr. Liu said: Linking global industrial chains and supply chains.Such a move would hurt others without benefiting itself.

a divergent future

CSIS’ Lewis said the 10-year ban would make China more likely to invest in its ability to produce its own technology, possibly in standards that are incompatible with Western technology.

That way, it might be happy to win customers in countries like Russia and Iran that are under U.S.-backed sanctions. China may also start competing with the US in other markets.

“If nothing changes, the system will be bifurcated by 2030,” Lewis said. “This is a new kind of competition. There will be Chinese things made to Chinese standards that they want to sell to the world market, and Western things made to Western standards that they want to sell to the world. There will be a market.”