SMIC

China Inches Closer to Legacy Chip Dominance – Will the U.S. Government Act Fast and Strong Enough? 

Posted on by China Tech Threat
A collection of recent headlines reinforces what China Tech Threat has been warning about for months – that the world is increasingly at risk of relying on China for its legacy semiconductor needs. The news tells the story of China’s march to obtain total self-sufficiency in semiconductors. This month the world saw Huawei unveil a phone with a 7nm chip made by SMIC – a technological breakthrough that caught many by surprise. CNBC reports that revenue from China’s top chip equipment makers surged in the first half of the year. And Arrian Ebrahmi notes in The Diplomat that China is boosting the country’s tax credit for investments in semiconductor research and development by 20% – further incentivizing Chinese firms to… Read More

4 Export Control Fallacies and Their Rebuttals

Posted on by China Tech Threat
By Steve Coonen Writing in the Wall Street Journal last week, professors Henry Farrell and Abraham Newman criticize American export control policies as having the potential to create more problems then they solve. Pointing the finger at America as a force for destabilization is divorced from the reality of the global export control landscape. China’s commitment to using American technologies to build up its military has necessitated export controls targeting the country’s chip sector. Here are four fallacies promoted in the article (in italics) and my rebuttals: Fallacy #1: The U.S. is to blame for export control-related global disruptions “A new tit-for-tat is emerging, and as China responds to the turn in American policy, there is a risk that the… Read More

National Security is Economic Security

Posted on by China Tech Threat
Last week, the White House released the much anticipated Executive Order on outbound investment. As Politico notably reported in a preview story, President Biden’s action will require “U.S. firms to notify the federal government if they invest in some lower-end semiconductor production not already covered by export controls.” This is a step in the right direction and comes as the Administration is starting to wake up to the threat of a China-dominated legacy chip market. But more needs to be done. .kb-image9510_bbe45b-0f.kb-image-is-ratio-size, .kb-image9510_bbe45b-0f .kb-image-is-ratio-size{max-width:372px;width:100%;}.kb-image9510_bbe45b-0f figure{max-width:372px;}.kb-image9510_bbe45b-0f .image-is-svg, .kb-image9510_bbe45b-0f .image-is-svg img{width:100%;}.kb-image9510_bbe45b-0f .kb-image-has-overlay:after{opacity:0.3;} Financial Times columnist Rana Foroohar reacted to the Executive Order in a piece aptly titled, “The US now accepts national and economic security can’t be separated.” She says: [W]estern technology… Read More

Why BIS Should Put Components for Legacy Semiconductors Under Export Controls

Posted on by China Tech Threat
By Steve Coonen Last week, Chairman Mike Gallagher of the House Select Committee on the Chinese Communist Party spoke a plain truth: “Every foreign business that enters China takes on a sometimes silent, sometimes not-so-silent business partner: the Chinese Communist Party.” This reality continues to play out in the legacy semiconductor space. The more that American companies are allowed to sell components and manufacturing equipment for legacy chips to China, the more power the CCP will acquire to shape American national and economic security. When it comes to focusing on the danger of advanced or legacy Chinese chips, the U.S. government should reject a false choice of “either/or.” It must embrace a “both/and” concept and act to prevent a looming… Read More

Industry Analysts See China’s Legacy Chip Sector Booming – What Will the U.S. Government Do?

Posted on by China Tech Threat
Last year’s export controls on China’s advanced chip sector have been effective in denying China tools for making the most advanced semiconductors. But there has also been a negative consequence: China has ramped up efforts to dominate the legacy chip market. CNBC recently featured several analysts commenting on China’s prowess in producing legacy chips (those at 16 nanometers or above, depending on your definition, which appear in everything from cars to household devices): “China is showing good progress in making chips based on mature technology,” said Charles Shi, a principal and senior semiconductor analyst at asset management firm Needham & Company. “I certainly think that big Chinese chip makers will be able to survive building legacy chips and there’s a… Read More

Roslyn Layton Column: Don’t Make the Mistake of Ignoring China’s Legacy Chip Sector

Posted on by China Tech Threat
“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: .wp-block-kadence-advancedheading.kt-adv-heading_37edb0-07, .wp-block-kadence-advancedheading.kt-adv-heading_37edb0-07[data-kb-block="kb-adv-heading_37edb0-07"]{padding-left:40px;font-style:normal;}.wp-block-kadence-advancedheading.kt-adv-heading_37edb0-07 mark, .wp-block-kadence-advancedheading.kt-adv-heading_37edb0-07[data-kb-block="kb-adv-heading_37edb0-07"] mark{font-style:normal;color:#f76a0c;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;} 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.… Read More

New CTT Paper: Three Solutions for Confronting the Looming Chinese Legacy Chip Monopoly

Posted on by China Tech Threat
Yesterday China Tech Threat released a new paper detailing the dangers a looming Chinese legacy chip monopoly poses to U.S. national security and economic competitiveness.  In essence, With the U.S. government exclusively targeting China’s advanced chip manufacturing sector, the People’s Republic of China (PRC) – led by SMIC, its national champion working with the Chinese military – is exploiting the U.S. government’s tunnel vision and spending billions to dominate legacy chip manufacturing. CTT also wrote a brief summary  yesterday of three major dangers: The U.S. would potentially be dependent on China for chips essential to various military technologies and critical infrastructure. The world would be re-exposed to supply chain vulnerabilities associated with China-based chip production. The Chinese Communist Party would… Read More

More Voices Call for Action to Stop Chinese Control of Semiconductors – Including “Mid-Range Chips”

Posted on by China Tech Threat
This week started with an unusual endorsement of active export controls by a prominent financial titan. Warning of the prospect of a Chinese-dominated chip market in his annual letter to shareholders, JP Morgan Chase CEO Jamie Dimon stated: But China, using subsidies and its economic muscle to dominate batteries, rare earths, semiconductors or EVs, could eventually imperil national security by disrupting our access to these products and materials. We cannot cede these important resources and capabilities to another country. At the time, Ben Noon – writing a must-read story in Foreign Policy –offers a cogent analysis of a problem the U.S. government has so far little considered: how to stop China from controlling the world’s legacy chip market. Noon acknowledges… Read More

HFAC Hearing Recap: McCaul Calls Out BIS on SMIC, Estevez Offers Mixed Bag on New Export Controls

Posted on by China Tech Threat
House Foreign Affairs Committee Chairman Michael McCaul wasted no time yesterday in taking a hard line on the Bureau of Industry and Security’s (BIS) approach to Chinese semiconductor firm Semiconductor Manufacturing International Corporation (SMIC). Said McCaul: “In just one recent six-month time period, BIS approved licenses worth $60 billion to Huawei and $40 billion to SMIC, their semiconductor company. Both of these companies are military companies for the CCP. And both are listed on the Entity List. BIS continues to mindlessly greenlight sensitive technology sales, and the CCP has proven they will use our own inventions against us.” McCaul’s broadside against SMIC is justified, since researchers such as James Mulvenon have definitively connected SMIC to the Chinese military. To his… Read More

Five Pressing Questions for BIS Director Alan Estevez

Posted on by China Tech Threat
The House Foreign Affairs Committee (HFAC) announced that BIS Under Secretary Alan Estevez will participate in a hearing on Tuesday morning at 10 AM on “Combatting the Generational Challenge of CCP Aggression.” The hearing should come as no surprise. Last June, Congressman McCaul told reporters that he planned to “focus like a laser on export control issues” once he became Chairman, adding that BIS “puts too much emphasis on industry and very little if nothing on security and that has to change.” Given his national security background, which is much needed at BIS at a time like this, China Tech Threat supported a vote for Mr. Estevez in the lead up to his March 2022 confirmation. We also applauded BIS’s… Read More