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Chinese Trade Groups: CHIPS Act and Science Law Hinders Innovation

Panasonic
(Image credit: Panasonic)

While the U.S. semiconductor developers and production tools producers welcomed the U.S. CHIPS Act and Science law that will provide subsidies to American chip developers and manufacturers, two Chinese trade associations believe that the legislation hinders innovation, discriminates against foreign companies, and intensifies geopolitical tensions.

"The act will intensify the global geopolitical competition in the semiconductor sector and hinder global economic recovery and future technology innovations," a joint statement by the China Council for the Promotion of International Trade (CCPIT) and China Chamber of International Commerce (CCOIC) published by the state-backed Global Times reads.

The recently signed CHIPS Act and Science law authorizes the U.S. government to award local chipmakers about $52 billion in grants and other incentives as well as provide a 25% investment tax credit for new fabs worth up to $24 billion. Meanwhile, companies who receive funds under the CHIPS Act and Science legislation will be prohibited from building new or expanding existing fabs in China and other countries that present a threat to the U.S. national security over the following 10 years. In addition, the new law will grant tens of billions of dollars to various high-tech research and development projects in the U.S.

"On the one hand, it is a typical industry-specific subsidy, which does not conform to the non-discrimination principle of the World Trade Organization," the statement partly published by ChinaDaily reads. "On the other hand, the bill identifies particular countries as key targets, which leads companies to be forced to adjust their global development strategies and layouts."

It is noteworthy that China's local authorities co-own fabs operated by Semiconductor Manufacturing International Corp. (SMIC), the country's largest contract maker of chips. Meanwhile, state government backs Tsinghua Unigroup, which happens to own YMTC, the only national 3D NAND producer, as well as controls tens of chip designers.

"The US is using government power to forcibly change the international division of labor in the semiconductor field and harm the interests of companies from all over the world, including Chinese and American companies," a quote published by Anadolu Agency reads.

Nowadays the U.S. only produces 12% of the global chip output and is significantly behind Taiwan, South Korea, and China. Subsidies for chipmakers in the U.S. will make it more appealing for them to build fabs in America rather than in Asian countries. But another important part of the legislation promotes research and development in the U.S. About half of the world's chips are designed in the U.S., with additional subsidies from the federal government that share could grow, something that Chinese trade groups seem to also oppose.

In addition to subsidizing semiconductor research, development, and production in the U.S., the U.S. government has been restricting sales of American chip production equipment to Chinese manufacturers (e.g., SMIC) to prevent the country from using American technologies and equipment in military purposes. Meanwhile, CCPIT and CCOIC are confident that U.S. restrictions will not slow down Chinese semiconductor industry development.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • rluker5
    One could say the same about China's government influence on their economy. I doubt United States semiconductor manufacturing is getting any more national subsidies than the other countries provide their own.
    Reply
  • WINTERLORD
    This is to funny the chinaease are just upset cause people finaly woke up to the reality that we need to invest and have our own prudution and talent here in america
    Reply
  • salgado18
    rluker5 said:
    One could say the same about China's government influence on their economy. I doubt United States semiconductor manufacturing is getting any more national subsidies than the other countries provide their own.
    I see the subsidies as absolutely normal, and probably way too late for America to invest in itself instead of in other countries.

    But forbidding companies from building fabs in certain countries sure is something else. That's almost like a sanction to China and others, not a protective act but a proactive act. This is the diplomatic issue the groups are raising, and I have to agree to them. The US is in a clear economic war with China, and probably an excuse away from a military one, and that is good to nobody.
    Reply
  • WarWolverineWarrior
    When TSMC is about to become CSMC, time to produce fabs locally.
    Reply
  • GenericUser
    "Chinese Trade Groups: CHIPS Act and Science Law Hinders IP Theft"
    Reply
  • Giroro
    The Chinese Government's chipmakers have had over 30 years and unlimited to funding to 'innovate'. So where's all the innovation and invention?

    I don't really see what's so innovative about plagiarism.
    Reply
  • law records
    GenericUser said:
    "Chinese Trade Groups: CHIPS Act and Science Law Hinders IP Theft"
    Exactly! This is the real reason they're salty.
    Reply
  • King_V
    I mean . . the fact that this statement was made by Chinese trade groups with ZERO sense of irony . . :LOL:
    Reply
  • hotaru251
    WarWolverineWarrior said:
    When TSMC is about to become CSMC, time to produce fabs locally.
    TSMC already said they'd never become china's and would effectively destroy the data and the fabs to prevent China from having them.



    on topic:
    i mean its specific to the nation yes, but not like China's stealing of IP's/trade secrets is any better nor is their provocation for war by constantly expanding into sea.
    Reply
  • wcbhkids
    You know policies are effective when the Chinese starts to complain.
    Reply