Momentum Builds in Washington to Protect and Re-Shore Semiconductor Supply Chains

Both the Biden Administration and the U.S. Congress are focused on reducing the national security risk from China-based semiconductor supply chains.

On March 17th, a bipartisan group of members of Congress introduced the Facilitating American-Built Semiconductors Act (FABS Act), a piece of legislation designed to “drive long term investment into the United States for the design and manufacturing of semiconductor chips.” This is in response to the fact that, as the office of Congressman Mike Kelly notes, “As global competitiveness for semiconductor control has intensified, countries like Communist China have provided incentives to draw companies to manufacture semiconductors on their soil.”

Days later, at a bipartisan Department of Commerce roundtable on March 21st, Secretary Gina Raimondo hosted Senator Todd Young, Representative Doris Matsui, Former National Security Advisor Lieutenant General (Ret.) H.R. McMaster, Former Deputy Administrator of USAID Bonnie Glick, Former Deputy National Security Advisor Matthew Pottinger, and National Security Commission on Artificial Intelligence Commissioner and Former Google CEO Eric Schmidt. Former Under Secretary of State for Economic Affairs Keith Krach, recently nominated for the Nobel Peace Prize, was also on the panel, stating simply “We are extremely vulnerable.”

The panel by and large conveyed the national security imperative of reversing China’s lead over the U.S. in chip manufacturing by urging support for the Bipartisan Innovation Act, which would help increase the manufacture of semiconductors inside the United States. China’s ambition to surpass the U.S. as the world’s chip leader is very real. Raimondo noted that “China has spent about $150 billion since 2014 in the development of the semiconductor industry,” and Pottinger stated that President Xi has the explicit goal of “permanently making the world dependent on China” and then “exploiting that dependency for political aims.”

Re-shoring American semiconductor supply chains isn’t the only way to protect American national security or tech leadership. The Department of Commerce’s Bureau of Industry and Security should institute export controls on Chinese semiconductor firms like Yangtze Memories Technology Company (YMTC), which, despite ties to the Chinese military, continues to use American technology in the manufacture of its own chips.  

Although Sen. Bill Hagerty and Rep. Michael McCaul have jointly written to Secretary Raimondo to insist that she “prevent YMTC from obtaining the technology it needs to continue engaging in activities contrary to our national security,” no export control action targeting YMTC has been taken to date. As China Tech Threat has written previously, absent new export controls on YMTC, American technology companies contracting with this Chinese state champion will be unwittingly, gradually putting themselves out of business as the Chinese Communist Party attempts to concentrate the world’s cutting edge technological production inside its borders.

Lam Research, whose CEO Tim Archer testified at a U.S. Senate Commerce Committee hearing on March 23rd, is one such company supplying YMTC. In the words of its CEO Tim Archer, Lam “makes the machines that makes the chips.” Unfortunately, many of these machines are undoubtedly finding their way into the hands of YMTC, if an open position at Lam calling for a China-based engineer to help YMTC is any indication. Lam’s partnership is building up a Chinese tech behemoth seeking to put American chipmakers out of business. It’s also building up the Chinese military.

While Archer had no problem encouraging the U.S. Congress to appropriate money to support an American domestic semiconductor industry, Lam needs to take the next step and refuse to enhance a rival industry’s competitive standing. Even better is taking the decision out of the hands of companies like Lam. The Commerce Department should put YMTC on the entity list.