Business & Economy

U.S. Department of Commerce Launches Survey on Semiconductor Supply Chain Amid National Security Concerns

In response to increasing national security concerns regarding Chinese-sourced chips, the U.S. Department of Commerce has announced the initiation of a comprehensive survey focusing on the U.S. semiconductor supply chain and national defense industrial base. The survey aims to address potential risks associated with the use of Chinese-manufactured legacy chips, particularly in critical U.S. industries.

Starting in January, the survey comes at a crucial time as the Department of Commerce prepares to allocate nearly $40 billion in subsidies for semiconductor chip manufacturing. The primary objective of the survey is to identify how U.S. companies are sourcing “legacy chips,” encompassing both current-generation and mature-node semiconductors. These efforts align with the department’s broader goal of reducing national security risks posed by China’s involvement in the semiconductor supply chain.

A report released by the Department of Commerce on Thursday highlighted China’s significant subsidies to its semiconductor industry, estimating an infusion of approximately $150 billion over the last decade. This substantial financial backing has created what the report describes as “an unlevel global playing field for U.S. and other foreign competitors.”

Commerce Secretary Gina Raimondo expressed concerns about China’s practices, stating that there have been potential signs of actions to expand legacy chip production, making it challenging for U.S. companies to compete. In response, the U.S. government aims to address these challenges through the survey, seeking insights into the use and sourcing of Chinese-manufactured legacy chips within critical U.S. industries.

China’s embassy in Washington responded, accusing the United States of stretching the concept of national security, engaging in discriminatory practices, and politicizing economic and sci-tech issues.

Raimondo, anticipating future funding awards, noted that her department expects to make around a dozen semiconductor chips funding announcements within the next year. These announcements, potentially reaching multi-billion dollars, could significantly reshape the landscape of U.S. chip production.

The Commerce Department emphasized the need to promote a level playing field for legacy chip production, considering the impact of non-market actions by foreign governments on the U.S. legacy chip supply chain. The report revealed that U.S.-headquartered companies, responsible for approximately half of global semiconductor revenue, face intense competition supported by foreign subsidies.

Additionally, the report pointed out that the cost of manufacturing semiconductors in the United States could be 30-45% higher than the rest of the world. To address this, the Department of Commerce called for long-term support for domestic fabrication construction and suggested the enactment of permanent provisions incentivizing the steady construction and modernization of semiconductor fabrication facilities.

In conclusion, the survey and accompanying efforts by the U.S. government underscore the critical importance of securing the semiconductor supply chain and maintaining U.S. competitiveness in the face of evolving global challenges.

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