China poses a threat to US dominance in semiconductor industry

US Commerce Secretary Wilbur Ross sees the US semiconductor industry as still dominant globally but said he is worried that it will be threatened by China’s planned investment binge to build up its own chip making industry.

Ross said in an interview this week that his agency is considering a national security review of semiconductors under a 1962 trade law because of their “huge defence implications” including their use in military hardware and proliferation in devices throughout the economy.

He has launched similar “Section 232” reviews of the US steel and aluminium sectors, where a flood of imports especially from China has depressed prices, threatening the industries’ long-term health.

The probes could lead to broad import restrictions on the metals, and the Trump administration could potentially take similar actions based on the findings of a semiconductor investigation. “Semiconductors are one of our shining industries, but they have gone from substantial surplus to the beginnings of a deficit,” Ross said. “China has a US$150 billion programME to take that much further between now and 2025. That is scary.”

The 79-year-old billionaire investor was referring to China’s plans for massive state-directed investments in semiconductor manufacturing capacity under its “Made in China 2025” programme, which aims to replace mostly imported semiconductors with domestic products.