October 4, 2022

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The United States in the field of semiconductors lost the compass

When it comes to semiconductor strategy, American politicians have lost their way and don’t know what to do.

In June 2021, the US Senate passed a law that allocated more than $50 billion to increase semiconductor production.

At that time, we read in-depth analysis of BloombergThe shortage of computer chips due to the epidemic in full swing has highlighted the weakness of the United States and the difficulty of supplying various production chains, along with the heightened geopolitical tensions with China due to the tensions and national security concerns associated with Chinese technology. . Hence, ramping up and intensifying efforts to achieve some kind of technological self-production seemed the best solution across the political spectrum.

Public funds for the industry is still a dead end

But more than a year later, that money—linked to an official law, the Chip Act—has yet to be distributed. Senate Minority Leader, Mitch McConnellHe said he does not intend to vote on this bill unless Democrats abandon their spending plans on climate and other issues. Democrats, whose agenda faltered anyway, are preparing a more limited version of the chip bill, and Republicans in Congress are ready to support the new version.

But the danger of things stalling in Congress is not so strange. However, Washington has already shown that it is unable to act with the speed that its rhetoric requires. American companies are not satisfied with the chip business that is emerging in other countries around the world.

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Microchip, only 12% are produced at home in the United States

Especially since the complete reorganization of the US chip industry is taking place elsewhere than in Silicon Valley. Only 12% of America’s chip needs are produced domestically, compared to 37% in the 1990s, and the US lacks the skills to mass-produce the most advanced components at home.

Intel Corporation He tries to keep up, but the rising stars are Asian: Samsung Electronicswhich overtook Intel last year as the largest chip maker in terms of revenue, for example Taiwanese semiconductor manufacturing (TSM)that will overtake Intel in 2023.

Asia and later Europe

The governments of China, Japan and South Korea have launched a campaign aimed at nationalizing chip production as much as possible, with incentives 30% more than the United States on the costs of setting up a factory at home. These grants helped shift production of more advanced components to Asia. Europe is also working on a new stimulus package for chipmakers.

US policy has never been so keen on the chip industry, certainly not like that of many Asian countries or Europe.

American conservatives prefer to rely on market dynamics and laissez-faire not even too favorable unions, and have described chip business as blackmail.

China’s strongest

At the same time, the United States is increasing domestic production of high-end chips, thereby preventing China from becoming too powerful. To do this, it bans the export of components to its competitor, as it did by preventing the export of components to Huawei in 2019, and in 2020, the US blacklisted companies, including the first Chinese manufacturer of semiconductors, among others. 60 companies are among the companies that represent a potential national security risk. Thus, there are no exports and no access to sophisticated chip-making machines.

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However, blocking exports to China could turn out to be a boom for US producers. If China becomes completely self-sufficient on the chip front, regardless of the economic damage to US component suppliers, it will eventually stop turning to the US. Which will impoverish the American chip industry and innovation in the country.

The only way for it to be effective is to persuade allies to stop providing components to Chinese chipmakers as well. But that is not the case now. For example, the Netherlands continues to supply its components to China.