Lincoln Network Event: US to experience severe industrial loss without US Semiconductor Policy

On January 22, the Lincoln Network hosted a panel titled “The Future of U.S. Semiconductor Policy: Answering the China Chip Challenge.” Panelists included China Tech Threat Co-Founder Dr. Roslyn Layton, Stephen Ezell, Vice-President, Global Innovation Policy at the Information Technology and Innovation Foundation (ITIF), Dr. James Mulvenon, Director of Intelligence Integration at SOSi and Dan Lips, Director of Cyber and National Security at Lincoln Network.

In the most critical part of the conversation, host Alexiaa Jordan commended Dr. Layton for clearly stating the steps the US can take in order to secure their policy, as well as naming the companies that this policy must address. In a follow up to this, Dr. Mulvenon noted that when US export control policy on this topic has failed to “finish the job” as the Chinese continue to maneuver around them: “China then turned to SMIC and said this is our national champion on chipsets, but where does SMIC get all of its tools?… We [US Dept. of Commerce] had to extend the foreign direct product rule and the entity list to SMIC. Then we turned to YMTC and we fell a little short on this one. YMTC is China’s national champion on DRAM and flash memory… they also benefit from KLA and ASML and Lam and all of these people selling them tools and everything else. We didn’t finish the job, because the Chinese will just designate national champion after national champion.”

Panelists agreed that the Biden administration must act to counter the long-term objectives of the Chinese in this space because if they do not, the US is going to experience severe industrial loss. Mr. Ezell noted, “In the year 2005, China had less than 1% of the global solar panel market. By the year 2011, they had 80%. They had used policies of massive overcapacity, massive industrial subsidization to create a marketplace that knocked out European firms and…American ones…and it came to the point where they came to dominate that market as well. This is exactly what they are trying to do with semiconductors over the long term.” Dr. Mulvenon agreed stating that “There are ways the government and the private sector can partner that still maintain market competitiveness but then provide the stability of US government funding and regulatory support…and we shouldn’t be afraid of that.”

China Tech Threat applauds the Lincoln Network’s initiative and the panelists on their great work to expose this challenge and work towards addressing it.

Watch the full event here and read more about the panelists here. Read China Tech Threat’s report on US-China Semiconductor policy here.