The U.S. Congress has just passed the Chips and Science Act, which contains $52 billion in support for chip manufacturing with restrictions on expanding operations with China.
The Chips and Science Act was passed last week and is expected to be signed by the U.S. President this week. The Act provides a $280 billion funding package for Science and Technology activities. In which, there is a support package of $52 billion for the semiconductor industry. It is regulated that companies accepting subsidies will be restricted from making any "significant transaction" to expand their chip making capacity in China or any other foreign country of concern for 10 years.
According to Nikkei Asia, the provisions of the subsidy package are like barriers leaving chipmakers facing choice between U.S. and China. Semiconductor is an important competitive field. It is the brain of a variety of electronic devices from smartphones and laptops to data management. In addition, it also plays a large role in the production and control of modern weapon systems.
There is also an exception in the CHIPS Act that allows manufacturers to continue to invest in China if the investment protects U.S. economic interests. However, this exception only applies to existing facilities expansions and "legacy semiconductors", which are present in 28 nm chip and above. Intel and Qualcomm are two special companies in this expanded group.
Legacy chips are being used in many electronic devices, from smartphones, computers, home appliances, cars to modern weapons. They are present even more than advanced microprocessors. Many large Chinese companies are focusing on these chips to find a way to catch up and surpass the U.S.
The most important company in this field is Taiwan Semiconductor Manufacturing Company (TSMC). The company controls 84% of the market share of the smallest and most efficient circuit board chips used by the world's biggest tech brands from Apple in the US to Alibaba in China.
Tan Albayrak, a lawyer at Reed Smith law firm, said the provisions were aimed directly at companies investing in China. The White House wants to use the large amount of funding to ensure an uninterrupted supply chain in the future. "This is a balancing act in pursuing the policy goal of keeping a technological edge while minimizing collateral damage to the U.S.," he said.
Some manufacturers warn that passing the CHIPS Act will affect future investment plans. Morris Chang, founder of TSMC, has criticized the bill. At the same time, SK Hynix, a Chinese chip manufacturer, said: "Our company complies with regulations in countries where we do our business. We will respond flexibly to market circumstances in our investment and production plan." Samsung, on the other hand, declined to comment.
SCMP quoted Zhao Lijian, spokesman for the Chinese Foreign Ministry, on July 28, a day before the Act was passed: "China resolutely opposes the provisions of the Act because it could limit the regular cooperation in science and technology between the two countries."
Martijn Rasser, a senior fellow at Center for a New American Security, said: "These restrictions are an initial sketch of elements in an outbound investment review framework. U.S. policymakers are increasingly concerned about U.S. money supporting a buildup of capabilities in China."
Before that, many major chip manufacturers announced the expansion of operations in the U.S. TSMC said it will invest at least $12 billion in Arizona. Samsung committed to invest $17 billion in Texas. SK Hynix revealed plans to spend $15 billion on Intel and Micron.
Meanwhile, China has laid out plans to raise the country's share of homemade chips to 70% by 2025. Louis Lau, Director in the Investments Group at Brandes Investment Partners, said: "China's ambition is really to replace all the cutting-edge chips with domestically made chips. The U.S. chipmakers have long lost the edge in manufacturing".
Source : Ntdvn
