U.S. Sanctions Against China Could Hurt Own Domestic Industry: SIA

(Image credit: Intel)

While the Semiconductor Industry Association (SIA) — the organization that represents 99% of chip companies in America — understands how important national security is, it believes that curbs against potentially hostile nations could hurt the U.S. semiconductor industry as a whole. 

After the U.S. government imposed strict sanctions against Chinese chip and supercomputer sectors, various semiconductor companies lost some $240 billion of stock value nearly overnight. Among those who suffered are various companies, including developers of electronics design automation (EDA) tools, chip designers, wafer fab equipment (WFE) producers, and chipmakers themselves. Without money from Chinese clients, the U.S. semiconductor industry will certainly live and prosper, but with them, it would develop quicker, SIA notes.

"U.S. semiconductor companies are dependent on a “virtuous cycle” of innovation that includes large investments into research and development and access to global markets," a press release by SIA reads. "Historically, U.S. semiconductor companies have consistently invested about one-fifth of their revenues in research and development, among the highest shares of any industry." 

China is a big business for all parties involved. Here are some examples. 

Cadence supplies thousands of Chinese chip and motherboard developers with EDA tools, Applied Materials sells boatloads of WFE tools to entities like SMIC and Hua Hong, whereas Nvidia sells boatloads of artificial intelligence and high-performance computer accelerators to companies like Baidu. Finally, U.S. citizens working at Chinese companies earn hefty paychecks while serving in executive roles. Yet, all of them were affected by the strict curbs imposed by the U.S. government. 

SIA makes several points in its press release, which are explained quite well in the more detailed filing with the U.S. Department's Bureau of Industry and Security (BIS). One of those is job cuts at Lam Research: some 1,300 people will be cut (however, some of this appears to be due to outsourcing tool production to other countries). This only seems to be beginning,  American WFE companies like Applied Materials have yet to release their reports, yet the expectations are not good.

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.