US Launches Semiconductor Supply Chain Review Amid China Import Concerns

On Thursday, the U.S. Department of Commerce announced that it will initiate a survey of the U.S. semiconductor supply chain and the national defense industrial base. This move aims to address concerns about national security arising from the use of chips sourced from China. The survey’s objective is to determine how U.S. companies acquire “legacy chips,” which include current-generation and mature-node semiconductors. This effort is part of the department’s plan to allocate almost $40 billion in subsidies for the manufacturing of semiconductor chips.

Starting in January, the survey by the department aims to “mitigate national security risks presented by” China. It will specifically concentrate on the utilization and acquisition of legacy chips manufactured in China within the supply chains of vital U.S. industries.

China Invests Big in Chip Production, U.S is Concerned

According to a report issued by the department on Thursday, China has reportedly granted around $150 billion in subsidies to its semiconductor industry over the past decade. This substantial financial support has resulted in “an uneven global playing field for the US and other foreign competitors.”

Commerce Secretary Gina Raimondo stated, “Over the last few years, we’ve observed potential indications of troubling practices from China to increase their companies’ production of legacy chips and create challenges for U.S. companies to stay competitive.”

On Thursday, China’s embassy in Washington remarked that the United States “has been stretching the concept of national security. This has abused export control measures, discriminatory and unfair treatment against enterprises of other countries. It has also politicized and weaponized economic and sci-tech issues.”

Last week, Raimondo expressed her anticipation that her department would issue approximately a dozen semiconductor chip funding awards in the coming year. This includes the possibility of announcing multi-billion-dollar awards that could significantly transform U.S. chip production. The first award from the program was granted by her department on December 11th.

The Commerce Department emphasized that the survey would contribute to fostering a fair competition environment for the production of legacy chips. Raimondo added, “Dealing with non-market actions by foreign governments that jeopardize the U.S. legacy chip supply chain is a national security concern.”

U.S.-based companies generate roughly half of the worldwide semiconductor revenue, yet they confront strong competition backed by foreign subsidies, according to the department.

U.S Aims to Back Its Semiconductor Manufacturing Companies

The report indicated that the expense of producing semiconductors in the United States could be “30-45% higher than the rest of the world,” and it recommended sustained backing for the construction of domestic semiconductor fabrication facilities in the long term.

Additionally, the report suggested the implementation of “permanent provisions that encourage the continuous construction and modernization of semiconductor fabrication facilities, such as the investment tax credit scheduled to end in 2027.”