US Warns of China’s Steadily Growing Influence in the Semiconductor Industry

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Even with China’s continuously growing independence in the semiconductor and microchip manufacturing department, Intel CEO Bob Swan did not single out Beijing’s increasingly aggressive and competitive nature.

China’s growing influence

Chinese officials are devoted to becoming the leader in producing semiconductor chips in the next ten years. Experts say Beijing is working to decouple itself from U.S. chipmakers and focus its attention and support on indigenous developers instead.

If the United States does not implement a properly working national strategy to protect its relatively powerful semiconductor industry, China is set to become a potent rival. Many people believe Swan knows the threat that Beijing is becoming but is being cordial about the matter. Intel is planning to sell its Dalian factory to China, and opposing Beijing could cut that deal.

Swan wrote a letter to President-elect Joe Biden on November 23 recommending the Democrat to develop a national strategy to shield the country’s semiconductor industry. The only place that the nation could protect itself from is China’s Greater Bay Area.

The Semiconductor Industry Association showed that the United States accounts for only 12% of the world’s semiconductor production capacity, over 80% of which is found in Asia. The increasing costs and foreign government subsidies to national champions are a massive hurdle for American semiconductor manufacturing companies despite their still lucrative revenue in local markets.

Swan wrote in his letter that appropriate support for the U.S. semiconductor industry would result in more advances to technology.

China’s Greater Bay Area popped out sometime around the launch of the STAR Board in Shenzhen. The Asian country has massive funding, and government banks give their full support to local companies in an attempt to discover an excellent competitor for the global market. The risks Chinese officials take is much less compared to their American counterparts.

Many experts believe China’s Greater Bay Area could attract promising young students who attended prestigious universities such as MIT or CalTech. It could also appeal to those who experienced working at Silicon Valley, VC firms, or world-famous firms such as Intel or Apple. The thought of supporting their homeland could lead them to raise China’s technological standard even further.

The chairman of Chicago-based manufacturer of printed circuit boards and electronic components AVG Group, Shalabh Kumar, said, “It is extremely important to protect semiconductors from China.” He noted they were the brains of the entire electronic industry that is prospering today.

Beating out the competition

In a short amount of time, China has come a long way in advancing its technological level to a globally competitive level. In the 1980s, the country helped eliminate the printed circuit board industry in the United States, having hundreds of manufacturers transfer to Asia.

Worldwide, integrated circuit boards are among the most crucial export items and are on par with automobiles, pharmaceuticals, and oil, Forbes reported.

China took a massive portion of that booming business from the U.S. and Japan by providing a competitive price for its products. One by one, American integrated circuit board makers collapsed, causing billions of dollars to flow into Asia, specifically, Chinese manufacturing.

Swan’s letter to Biden focuses on the Democrat’s Build Back Better campaign promise that aims to support U.S. manufacturing, including high technology products.

Chief economist for the Coalition for a Prosperous America, Jeff Ferry, said, “To rebuild semiconductor manufacturing we need a bold industrial strategy along the lines of CHIPS for America Act that will provide tax incentives for U.S. chip companies to invest here.” He noted officials needed to fully support local markets to increase their foothold worldwide.

Currently, the semiconductor industry is at a decisive crossroads due to chips for personal computers becoming commoditized, and chips with artificial intelligence and machine learning capabilities are the future of technological advancements.

Danielle Joyce Ong

Danielle is a local journalist with a passion for exploring stories related to crime and politics. When Danielle isn't busy writing or reading, she is usually exploring the great outdoors and all the hiking trails in the Bay.