Home > News content

The United States is ready to throw $280 billion at its chip makers if they stay away from China

via:新浪科技     time:2022/7/30 11:02:01     readed:106

Author | Ning Bai

The Republican tradition of "opposing government intervention in the market"?

Is not important.

Democrats' insistence on denying federal money to big corporations?

It doesn't matter.

What, chips are an industry that relies heavily on global collaboration?

It matters even less when it comes to suppressing China and advancing American interests.

On Thursday, the House of Representatives followed up the Senate vote with a vote to pass the CHIPS and Science Act. It only needs to be signed by U.S. President Joe Biden, who has been a supporter and advocate of the bill.

The idea behind the long-proposed bill is to use huge government subsidies to push core chipmakers to take sides, forcing them to build factories in the United States and isolating China.

As a result, the bill was the biggest government intervention in industrial policy in decades, and a rare direct subsidy to large corporations. Opposing both of these were the biggest "inventions" of both parties, the bill was voted for overwhelmingly by both parties.

The bill's subsidies total $280 billion. According to a review by Beijing Daily, "The bill combines economic and national security policies, including two important elements of competition with China: one is to provide US $52 billion in subsidies and additional tax credits for US semiconductor companies. The second is to provide about US $200 billion in support for scientific research, especially in cutting-edge fields such as artificial intelligence, robotics and quantum computing."

It is understood that the chip and technology Act aims to be born in 2020 by the chip Act (one Act) of the budget of the investment, including the 52.7 billion dollars of subsidies, the semiconductor chip industry and equipment manufacturing 25% of the investment tax credit, as well as to the wireless broadband technology r&d and other supporting policies, to encourage companies to build factories in the United States.

Its huge subsidies are specifically planned as follows (the maximum amount of subsidies for each project generally does not exceed $3 billion) :

  • 39 billion to encourage chip production;
  • 11 billion for chip research and development;
  • 2 billion for the production of chips critical to national security;
  • 500 million to support the development of a safe and reliable semiconductor supply chain;
  • 200 million for the expansion of the semiconductor workforce.
图源:集微网Photo source: Set micro grid

The subsidy is certainly not easy to get. The bill makes no secret of the importance of isolating China as a precondition for receiving these huge subsidies.

According to the bill, the subsidy would prohibit "the expansion or construction of certain advanced semiconductor manufacturing capabilities in specified countries that pose a national security threat to the United States" for a period of 10 years:

"In commerce minister, according to the provisions of this article provide federal financial aid to cover the entity, on or before the date of the covered entity must sign an agreement with the minister, make clear a regulation during the 10 years from the grant date, covering defined entity shall not participate in agreement or other concern of the People's Republic of China national semiconductor manufacturing capability of the substantial expansion of the any big deal."

This is implemented by means of a review every four years:

"The Director of the Office of Science and Technology Policy conducts a review of technology enterprises every four years and specifies the scope and content of the review. The review requirements under this section shall cease ten years after the enactment of this Act."
图源《芯片和科技法案》。Image source Chip and Technology Act.

The ban was basically designed specifically for China, hence the nickname "China guardrail." The Chip and Technology Act grew out of the Bipartisan Innovation Act, also known as the U.S. -China Competition Act. The Bipartisan Innovation Act asserts the need to boost U.S. R&D capabilities in the name of competitive pressures and threats from countries like China, which is mentioned more than 800 times in the text.

The Chip and Technology Act adds that the "China guardrail" is only valid for two exceptions:

First, the entity's existing facilities or equipment for manufacturing conventional semiconductors;

Second, although it involves a significant deal to substantially expand semiconductor manufacturing capacity, the deal only involves the production of conventional semiconductors and primarily serves the foreign market of interest.

Neither exception covers semiconductors deemed critical to national security by the Secretary of Commerce, the Secretary of Defense, and the director of National Intelligence.

It should be noted that conventional semiconductor processes are generally 28 nm and above. That also means its reach will be broader. Until then, fabs were at least less constrained to deploy 16 nanometers or more of capacity, as TSMC's Nanking Fab 16 can do. And even with these two exceptions, the Commerce Department must still be notified of major transactions involving such matters during the term of the agreement, leaving considerable room for manoeuvre.

This bill will be another great evil law of the United States, another great invention of American isolationism against China.

The global semiconductor industry has developed into a multi-billion dollar industry, and the industrial chain has been globalized. The United States, South Korea, Japan, China, Europe and other parties play their respective advantages, are one of the indispensable components of the global semiconductor industry. At present, no country or region in the world can achieve self-sufficiency in semiconductors. According to statistics, the production of some advanced chips includes more than 1,000 processes and requires more than 70 cross-border collaborations to complete.

A researcher, according to the analysis of the root of the so-called chip act, is to use a lot of fiscal subsidies and tax breaks for ways to improve the domestic chip manufacturing capacity, at the same time trying to limit the development of Chinese chip manufacturing industry, but such non-market behavior is bound to destroy the existing global chip industry chain, and is likely to lead to a global chip (especially advanced processing chip) of excess capacity.

A spokesman for China's Ministry of Commerce (MOC) said on Monday that the bill provides huge subsidies to the US chip industry, which is a typical policy to support the industry in a differentiated way. Some provisions restrict the normal economic, trade and investment activities of relevant companies in China, which will distort the global semiconductor supply chain and disrupt international trade. China is highly concerned about this.

Even before the law takes effect, the U.S. is forcing chip manufacturers to take sides between China and the U.S., especially semiconductor manufacturers with investments in mainland China, such as TSMC, Samsung, Intel, Global Wafer, etc. According to US media reports, several of the chip companies have said they will make business decisions in the coming weeks based on receiving assurances that the funds will be forthcoming.

translate engine: Youdao

China IT News APP

Download China IT News APP

Please rate this news

The average score will be displayed after you score.

Post comment

Do not see clearly? Click for a new code.

User comments