U.S. May Be Too Reliant On Chinese Semiconductors

A report concludes that having our nation’s mission-critical equipment supplied by an enemy is a bad idea. The United States, however, has been doing just that with respect to semiconductors and China.

This dynamic might shift with the full and vigorous execution of the Zero China Chips policy first proposed in the FY2023 NDAA. This is a certain way to reduce the United States’ and the world’s reliance on the People’s Republic of China (PRC) by increasing semiconductor manufacturing at home, our ally nations.

Semiconductors are the backbone of our digital civilization, powering everything from vital infrastructure and national security to advances in AI,  biotechnology, quantum computing, and 6G. However, unreliable semiconductors may pose threats to the economy, health, and safety via failure or sabotage. Semiconductors are crucial to the economic and national security struggle between the United States and the People’s Republic of China (PRC).

China’s President Xi Jinping’s persistent pursuit of scientific, military, and economic superiority hinges on semiconductors and the potential for the weaponization of international firms’ short-term profitability emphasis. 

The PRC lures global enterprises with below-market rates and the promise of market access. Outsourced, low-cost manufacturing revenues are utilized to enhance PRC capabilities and generate surplus capacity via unequaled production of technology like semiconductor production equipment.

The goal is to generate worldwide PRC reliance to undercut and remove rivals.

A report from Computer World says that the CHIPS and Science Act was signed into law by President Biden in August of last year, and it allocates $52.7 billion to the United States Department of Commerce for a series of projects meant to “revitalize” the United States’ position in the research, development, and production of semiconductors. In February, the government released the first of its $39 billion in incentives.

By reducing the price gap with nations like  South Korea, Taiwan, and China, the CHIPS Act hopes to boost the proportion of microprocessors manufactured in the United States. The governments of such countries already subsidize the semiconductor industry.

The semiconductor industry has made significant investments in overseas sites, and bringing production back to the United States might take decades.