Raimondo Talks Tough at Reagan Defense Forum But Challenges Remain  

Last weekend Secretary of Commerce Gina Raimondo spoke at the annual Reagan National Defense Forum, one of the signature events on the national security calendar. As the name might suggest, the gathering is traditionally popular with right-leaning national security figures, so credit a Democratic Secretary of Commerce for making an appearance. While she did have comments worth applauding, it’s clear the administration is still focused on advanced chips and needs to broaden its focus to counter threats at the legacy chip level for the sake of our national security and economic prosperity.  CTT has long argued that U.S. semiconductor equipment companies are putting cash over country (see our report by that name) by selling some of the world’s most sensitive… Read More

New Report Warns of Chinese Control of Legacy Chips

The Silverado Policy Accelerator is out with an excellent new report on how the Chinese government is using subsidies to grow China’s semiconductor industry, put Western firms out of business, and make the world dependent on Chinese legacy (or “foundational”) chips.Foundational Fabs: China’s Use of Non-Market Policies to Expand Its Role in the Semiconductor Supply Chain hits on many of the same notes which China Tech Threat’s Every Chip Matters did earlier this year. As Foundational Fabs’ executive summary states:The Chinese industry is already impacting the global industry by putting downward pressure on prices for some products and capturing market share. This is critical as foundational semiconductors account for three-quarters of global foundry capacity, are essential to applications… Read More

SMIC’s Boom Shows Last Year’s Export Controls Haven’t Properly Limited the PRC’s Semiconductor Capabilities

A year ago on October 7, the U.S. government seemed like it was getting tough when it issued  long-awaited export controls targeting the Chinese chip sector. But, one year in, it is now evident that these restrictions have not been adequate to stop China from making major chip advances or positioning itself to dominate the global semiconductor space.As Kate O’Keefe and Asa Fitch report in the Wall Street Journal, Chinese semiconductor maker SMIC is under some form of sanctions from the Department of Defense, the Department of Treasury, and the Department of Commerce. But it still took in $1.5 billion in 2022 from American semiconductor design companies. That revenue can be plowed back into SMIC’s research and development process… Read More

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

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

By Steve CoonenWriting 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

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%;}.wp-block-kadence-column .kt-inside-inner-col .kb-image9510_bbe45b-0f.kb-image-is-ratio-size, .wp-block-kadence-column .kt-inside-inner-col .kb-image9510_bbe45b-0f .kb-image-is-ratio-size{align-self:unset;}.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… Read More

Why BIS Should Put Components for Legacy Semiconductors Under Export Controls

By Steve CoonenLast 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?

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

“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

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