China Launches Agency to Recruit Foreign Chipmakers, Targets Major U.S. Companies

The People’s Republic of China will soon launch a special organization to attract foreign semiconductor makers and investment, Asia Nikkei reported this month.

The “Cross-Border Semiconductor Work Committee”—a collaboration among the Chinese Ministry of Industry and Information Technology, the Ministry of Commerce, and Tsinghua University—will work to strengthen cooperation between the PRC and foreign chipmakers, with the end goal of building a self-sufficient supply chain.

“The organization appears to be designed as a way to acquire advanced semiconductor technologies from the U.S., Japan, and Europe to help further this goal,” the article notes.

The agency will provide funding and government support to encourage foreign semiconductor makers to set up development and manufacturing bases in China. It may also offer financial backing to Chinese companies that seek to acquire foreign chipmakers.

Documents obtained by Nikkei name U.S. chipmakers Intel and Advanced Micro Devices as among the companies targeted by the Committee for acquisition.

“China is one of the largest growth markets in terms of sales, so [semiconductor companies] can’t ignore the wishes of the Chinese government,” one executive told Nikkei—suggesting that chipmakers may feel pressured to comply with the new agency’s objectives as a condition for doing business in China.

The news follows growing calls for the U.S. Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) to re-review SK Hynix’s proposed purchase of Intel’s NAND memory chip arm.

CFIUS approved the acquisition last year. Months later, China’s antitrust regulator also approved the deal—however with several requirements, including that the resulting business entity helps a “third-party competitor” enter the market.

During a CTT forum last month, Nazak Nikakhtar, former Assistant Secretary for Industry and Analysis at the U.S. Department of Commerce’s International Trade Administration, and Jeff Ferry, Chief Economist at the Coalition for a Prosperous America, cautioned that the new conditions on the sale could create a new channel for the Chinese government and military to steal sensitive U.S.-made technology.

CFIUS “very much” has the legal authority to require a second review of the sale, Ms. Nikakhtar stated.

“China is not entitled to put conditions to force Western companies to transfer valuable IP technology as the price to enter the Chinese market,” Mr. Ferry added. “We cannot allow China to get a strangle-hold on this technology.”