There’s an increased policy focus on Semiconductor Manufacturing Equipment (SME) and advanced integrated circuits that power data centers, pcs, missiles, drones, satellites, cloud, AI, smartphones, and communications networks. Americans are concerned about the advanced technology like SME falling into the hands of the military in the People’s Republic of China (PRC). Congress passed the 2018 Export Control Reform Act (ECRA) to prevent this, and it requires the Department of Commerce to implement rules on the export on these technologies.
Last Friday the Trump Administration’s Department of Commerce announced that American chip companies would have to get a license to sell strategic technology to Semiconductor Manufacturing International Corporation (SMIC) because of its connections to PRC military. While it’s welcome news that the restrictions have been applied, there are still other PRC semiconductor firms we have to worry about.
Today China Tech Threat releases a new report The Art of Balancing Economic and National Security: Policy Review of Semiconductor Manufacturing Equipment Export Control that looks at the semiconductor industry amid China’s moves to create their own foothold in the memory space. Based on an analysis of ten different key organization’s thoughts on the semiconductor space, China Tech Threat co-founder Roslyn Layton’s study outlines three different policy categories of recommendations – namely, no restrictions, a balanced approach, and a partial tech decoupling.
In general, the papers favor a strong US domestic semiconductor industry and generally support increased intellectual property protection and enforcement, some level of government investment in research and development, workforce development, and favorable tax policy. However, positions diverge on foreign policy and how to address the PRC and the security of semiconductor supply. The papers were categorized along the following types of policy preference: No Restrictions, Balanced Approach, and Technology Decoupling.
The paper concludes that the balanced approach is the most prudent policy option because it optimizes security and economic goals. Moreover, the US should move to restrict semiconductor manufacturing equipment companies from operating with companies with ties to the Chinese military – specifically, SMIC but also the lesser known Yangtze Memory Technologies Co., Ltd. (YMTC) and Changxin Memory Technologies (CXMT). This will help bolster the US semiconductor industry in the US and limit the proliferation of SME technologies to the PRC military.