“De-risking” has become the big buzzword to convey how Western democracies intend to manage their economic relationships with China. The concept is good. So why isn’t the threat of the Chinese legacy chip sector a greater part of the conversation?
As Roslyn Layton writes for the Foundation for American Innovation, U.S. policymakers are ignoring a looming Chinese legacy chip monopoly at the expense of American national security and economic competitiveness:
A Chinese-dominated legacy chip market would mean U.S. warfighters (and U.S. critical infrastructure) could become dependent on Chinese chips for their equipment. The world would once again be at the mercy of China-based semiconductor supply chains, whose unreliability bedeviled the world economy during the pandemic. And with Chinese-made chips in most every device, the Chinese Communist Party would have virtually unlimited new conduits for cyberattacking, stealing from, and spying on Western targets. “Made in China” has never sounded more dangerous.
Following the Every Chip Matters report China Tech Threat released in April, Layton proposes several ideas for shutting down threats from the Chinese legacy chip sector:
- Impose export controls targeting SMIC and other legacy chipmakers
- Strengthen and expand Section 5949 of the NDAA to prevent contractors servicing the federal government from using Chinese chips in their equipment.
- Investigate the use of tariffs under Section 301 of the Trade Act of 1974 to make Chinese chips prohibitively expensive
- Ensure that a proper portion of the $39 allocated for domestic chip manufacturing under the CHIPS Act is used to foster legacy chip production
We conclude by quoting Layton: “The chips might be small, but the stakes couldn’t be bigger. The U.S. needs to get serious about tackling China’s legacy chip industry.”
Be sure to check out Roslyn’s column on Substack!