Semiconductors: the US has revealed a plan to counter China

Techno 10 August, 2022

«Cutting costs, creating jobs, strengthening supply chains and countering China». The headline of the press release published on Tuesday, August 9, on the website of the US president is enough to evaluate the law on semiconductors and science, signed on the same day in the garden of the White House by President Joe Biden.

He was surrounded by several big industry bosses, including Pat Gelsinger, general manager of Intel, the first American manufacturer of electronic chips.

Initiated by the Senate and supported by both Democrats and Republicans, this Law on Chips and Science is clearly aimed at attacking China’s position in the production of components, the strategic nature of which was revealed due to shortages caused by the Covid-19 pandemic. The Chinese Embassy in Washington also stated that it sees in this text – with regret – «a reminder of the spirit of the Cold War».

His signature appeared a few days after a trip to Taiwan, on Wednesday, August 3, by the Speaker of the House of Representatives Nancy Pelosi. Renewing tensions with Beijing, the visit reminded the United States of the dangers to national security of its dependence on components manufactured in China and, more broadly, in Southeast Asia.

According to the American Semiconductor Industry Association (SIA), the United States accounts for only 12% of the world’s chip manufacturing capacity, which is three times less than in 1990. In 2020, according to SIA, of the thirty-nine new plants built in the world, only four were located in America, compared with ten in China, ten in Taiwan, five in South Korea, five in Japan, four in Europe and one in Singapore.

To change the balance of power, Washington is ready to put $52.7 billion (51.6 billion euros) on the table in the form of subsidies distributed over ten years, of which $39 billion will go to stimulate production on American soil. Two billion will be reserved for chips used only in the automotive and defense industries. In addition, investments in industry or equipment will result in a tax benefit of 25%, which is estimated at $24 billion.

To ensure the effectiveness of these measures, US lawmakers impose a number of restrictions. There is no doubt that the «beneficiaries» of this aid are «building certain facilities in China and other countries of concern», – the White House warns. Among them are Russia and Iran, as well as North Korea, the law says. Beneficiaries should also commit not to increase the production capacity of their Chinese factories for the production of high-performance chips for ten years.