02 Nov 2023 -

U.S. plans gradual chip separation from China over five years


The U.S. has chosen to extend export waivers, enabling South Korean and Taiwanese semiconductor producers to further equip Chinese plants with American technology, reports Nikkei.

This move hints at a more elongated strategy by Washington to decouple its supply chains from China, aiming for a span of roughly five years. Originally, these export privileges were scheduled for termination this October, following the U.S.’s prior-year embargo on sophisticated semiconductor tech and equipment sales to China. However, potential significant upheavals in the sector have steered U.S. policymakers towards a more moderate approach.

Prominent beneficiaries of the waiver extension include Samsung Electronics. Over the past year, this tech giant has been arduously fitting its semiconductor facility near Xi’an with the requisite equipment. This plant manufactures NAND flash memory, integral for devices from brands such as Apple, HP, and Dell. Similarly, SK Hynix and Taiwan Semiconductor Manufacturing Co. have established operational bases in China. All three have actively petitioned the U.S. administration for a prolonged waiver period. Supporting their appeal, U.S. firms, given that a sizable portion of Apple iPhones, HP, and Dell products originate from China, have underscored the vital role of advanced semiconductors from their Asian counterparts.

U.S. Commerce Secretary, Gina Raimondo, actively sought the industry’s sentiment on these China-related restrictions. While the U.S. remains committed to maintaining its semiconductor tech lead over China, they believe a brusque separation could ultimately prove counterproductive. “It’s a grand vision,” remarked Raimondo, indicating confidence in achieving substantial progress in “five or six years.”

In a strategic move to fortify its domestic semiconductor sector, the U.S. has proposed a $52 billion incentive over five years, hoping to allure more investment from South Korean and Taiwanese players. Those with extended waivers also foresee an eventual decoupling from China.

India is keenly eyeing this scenario, anticipating growth for its indigenous electronic manufacturers. However, the effectiveness of the U.S.’s stratagem remains uncertain. China’s relentless investment in refining its semiconductor competencies is evident. With Huawei unveiling its 7-nanometer chip smartphone, concerns arise about the circumvention of U.S. restrictions, possibly via third-country equipment imports. The shifting of South Korean and Taiwanese experts to China, taking their speciality with them, only intensifies these worries. Reacting to such apprehensions, the U.S. recently announced added export limitations to prevent advanced semiconductor tech transfers to China through alternative nations.

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