US tech-investment restrictions: American chip industry calls for continued access to Chinese market hours after Joe Biden announces curbs

Hours after the US President signed an executive order restricting outbound investment in key tech industries that could allow China’s military to advance, American semiconductor firms called on the Biden administration to ensure unhindered access to the Chinese market.

On Wednesday, the Semiconductor Industry Association (SIA), the trade body of the US chips industry based in Washington DC, reacted warily to the move that is expected to sharply escalate already fierce US-China competition for pre-eminence in technology and economic strength.

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The SIA, while emphasising that the industry recognised the need to protect national security, said it believed ensuring a “strong and globally competitive” US semiconductor industry was “vital” to achieving that goal.

“We hope the final rules allow US chip firms to compete on a level-playing field and access key global markets, including China, to promote the long-term strength of the US semiconductor industry and our ability to out-innovate global competitors”, the statement read. It said the SIA welcomed the opportunity to give feedback as part of the public comment period.

The US Treasury Department will be responsible for implementing and administering the new rules. It will accept written public commentary for the next 45 days to inform its formulation of what Treasury Secretary Janet Yellen has described as a “narrowly targeted” programme.

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The SIA remarks follow an appeal made by the industry group last month, urging both Beijing and Washington to “ease tensions and seek solutions through dialogue, not further escalation”.

“And we urge the administration to refrain from further restrictions until it engages more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied and fully coordinated with allies,” the SIA said in a statement.

It said allowing the industry to have “continued access to the China market, the world’s largest commercial market for commodity semiconductors, is important to avoid undermining the positive impact” of the $200-billion Chips and Science Act, which the Biden administration introduced to stimulate the US semiconductor industry.

Washington’s latest tactic to hobble China’s progress in “sensitive technologies” was announced on the one-year anniversary of the landmark legislation.

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The SIA pointed out in a separate press release issued on Wednesday that the industry was still waiting for promised federal subsidies – roughly $50 billion.

It said that while the new law was being implemented and no funds had been distributed “companies in the semiconductor ecosystem have already announced dozens of new projects in the US – totalling hundreds of billions of dollars in private investment – in anticipation of CHIPS incentives”.

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It reiterated the semiconductor association’s demand to address a shortage of skilled workers “facing the semiconductor sector, and the entire US economy” and ensure the chips industry had open access to global markets.

The US Commerce Department is expected to start issuing the funds later this year. “We’re pushing the team to go fast, but even more important, to get it right”, US Secretary of Commerce Gina Raimondo recently said.

South China Morning Post