![]() ![]() 5 The White House, “Remarks by National Security Advisor Jake Sullivan at the Special Competitive Studies Project Global Emerging Technologies Summit,” September 16, 2022, . Washington’s move from an earlier goal of ensuring that the United States maintained a steady lead in technological sophistication to an active effort to limit Beijing’s capabilities was expressed most clearly by National Security Advisor Jake Sullivan in a September 16, 2022, speech. Last year marked a dramatic acceleration in the US effort to control the rise of China’s advanced semiconductor sector. US Semiconductor Strategy: To “Degrade Their Battlefield Capabilities” ![]() It begins by examining the policies put in place by the Biden administration, and then discusses the changes taking place across the industry, with a focus on Asia. This paper explores the potential implications of US semiconductor policy for the global semiconductor supply chains and the competition for primacy in an industry that is constantly changing the face of the global economy and one that has implications for global security in all its dimensions. 4 For TSMC in Phoenix, see Steve Holland and Jane Lanhee Lee, “TSMC Triples Arizona Chip Plant Investment, Biden Hails Projected,” Reuters, December 7, 2022, also see Steve Lohr, “Micron Pledges up to $100 Billion for Semiconductor Factory in New York,” New York Times, October 4, 2022, Meghan Bobrowsky, “Intel to Invest at Least $20 Billion in Ohio Chip-Making Facility,” Wall Street Journal, January 21, 2022, and James Morra, “Samsung Plans to Build $17 Billion Chip Plant in Texas by 2024,” Electronic Design, November 29, 2021, . The CHIPS and Science Act already is becoming an important factor in corporate strategy, providing incentives for Taiwanese, Korean, and American companies to make big bets on new factories in places like New York, Ohio, Texas, and Arizona-witness Taiwan Semiconductor Manufacturing Company’s (TSMC’s) recent decision to build a second factory in Phoenix. As US restrictions mount, and sales of certain technologies to China flag, the once-unimaginable process of reorienting semiconductor supply chains will become an ever-present reality. That amounts to more bad news for corporate leaders in Asia, North America, and Europe who have spent the past generation building a globe-spanning semiconductor industry that has faced few barriers to expansion. Rather, the momentum to constrain Beijing’s semiconductor program is likely to continue in the coming months, at the very least with additional restrictions on Chinese companies and government-linked entities, and unprecedented bureaucratic scrutiny of American venture-capital and equity-financing flows to China. But the current state of play of sanctions and support for US-based semiconductor production, including by Taiwanese and Korean chipmakers, is not the endpoint in this process. The Biden administration insists that its restrictions on sales to China are intended only to limit China’s ability to produce the cutting-edge chips that can feed into the development of weapons and other strategically important technologies-and not to cripple its semiconductor industry. As such, the Biden administration has set in motion a process that could alter the business strategies-and fortunes-of homegrown and foreign-invested semiconductor companies based in China, world-leading chipmakers in Taiwan and South Korea, and suppliers around the world that provide the industry with the machinery and myriad inputs that fuel chip production. They also highlight an effort to restructure the complex, multinational supply chains centered on East Asia that manufacture hundreds of billions of dollars of semiconductors a year. 3 Ellen Nakashima, Jeanne Whalen, and Cate Cadell, “U.S. Widens Ban on Military and Surveillance Tech Sales to China,” Washington Post, December 15, 2022. Taken together with a steady stream of Biden administration prohibitions on technology sales to key Chinese companies, the US initiatives represent a profound turn toward competition with China in the high-tech realm. 2 US Department of Commerce, “Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic of China (PRC),” October 7, 2022, . Just two months later, the Joe Biden administration issued wide-ranging restrictions on the export to China of chips and chip-making technology to undercut that country’s ability to manufacture the same class of integrated circuits. 1 The White House, “FACT SHEET: CHIPS and Science Act Will Lower Costs, Create Jobs, Strengthen Supply Chains, Counter China,” August 9, 2022. In August 2022, the US Congress passed the CHIPS and Science Act, a law that approves subsidies and tax breaks to help jump-start the renewed production on American soil of advanced semiconductors. ![]()
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