What to Expect, the Next Four Years

Earlier this week, China Tech Threat’s Roslyn Layton and Coalition for a Prosperous America’s (CPA) Jeff Ferry put out a new report on “Maintaining U.S. Leadership in Semiconductors and Countering China’s Threats.” They discussed it yesterday as part of CPA’s annual conference on “What to Expect, the Next Four Years.”

In framing the discussion and summarizing the paper, Roslyn noted:

  • American consumers were once told that Chinese IT was a good thing. That approach created many problems, including loss of manufacturing prowess and personal information, as well as increased cyberattacks and data breaches. Now we have a national security issue, and it’s playing out in many areas, including the semiconductor industry.
  • Semiconductors are the building blocks of all electronics. They are in our phones, our cars, and many every-day, consumer devices. But they are also used in defense software and capabilities, and when they get into the wrong hands, they can literally be aimed back at us in weapons. 
  • The U.S. makes about 12% of all chips globally, and we’re losing market share to China. In fact U.S. companies are accelerating America’s decline by selling semiconductor manufacturing equipment to China. More specifically, firms like Applied Materials, KLA, and Lam Research are selling to CXMT and YMTC, two fabs known for their links to the Chinese military. If the Biden Administration can do anything in the next four years, it’s simply to enforce our existing laws for export controls, which regulate the sale of this technology.
  • We need to do more than put a band-aid on America’s decline; we need to regain leadership and restore America’s semiconductor manufacturing capability. The goal set forth in the paper is to see U.S. majority-owned fabs produce 50% of every major category of semiconductors. This includes memory chips, which are critical pieces to enabling digital infrastructure and next-generation technologies.
  • The good news is that the U.S. is already strong when it comes to chip design, and that capability can be strengthened with the manufacturing ecosystem. To significantly scale up semiconductor manufacturing, tax credits and incentives to purchase American-made chips are essential. The CHIPS Act will be helpful, but more needs to be done.

During Q&A, she and Jeff both commented on the recent announcement that Intel plans to build two fabs in Arizona. Both noted that this is good news, but doesn’t solve the manufacturing problem. We need more fabs – a lot more.

Additionally, when asked how much the it would cost to do what Roslyn and Jeff propose, Jeff reminded the audience that it’s an investment. When you invest in spurring domestic semiconductor manufacturing, what do you get? For one thing, you get good paying jobs throughout the supply chain. 

So, to the theme of the conference, what should we expect in the next four years? Roslyn was asked what she would do as President in the first 100 days, etc. Beyond the policy recomendations made above to enforce existing export control laws and create incentives to increase semiconductor manufacturing in the U.S., Roslyn said it’s clear that voters want tougher policy on China, and she is eager to see what President Biden does to deliver on his promise to strengthen trade with allies. As she commented, we want the exchange of technology with our allies and friends; not our enemies.

Click here to watch the discussion, which starts at 36:28: https://twitter.com/i/broadcasts/1LyxBdrparMGN