US-China tech war: calls for Biden to fund US semiconductors grow louder in Washington
- South Korea currently leads with a 25 per cent share of the world’s advanced chipmaking capacity, followed by Taiwan, Japan and China
- Cotton, a China hawk, views Beijing’s rivalry in cutting-edge technology as a threat to the US’s commercial and military advantages
US Republican Senator Tom Cotton, who is on Beijing’s sanctions list, has joined the public debate among industry groups and think tanks in advocating US government support for the country’s semiconductor manufacturing industry as part of a broader effort to win the tech war with China.
Cotton published a report last week, entitled Beat China, noting that American chip making ability has weakened over past decades, with the country’s share of global cutting-edge wafer fabrication capacity plunging to 11 per cent from more than a third in 1990. South Korea currently leads with a 25 per cent share of the world’s advanced chipmaking capacity, followed by Taiwan with 22 per cent, Japan with 16 per cent and mainland China at 14 per cent.
Cotton said the US must upgrade its own semiconductor manufacturing capacity to “build more independence and resiliency into the US semiconductor value chain” through federal grants and public-private partnerships.
That view is echoed by American industry groups and think tanks. In the past two weeks, Washington-based US tech advocacy group Information Technology Industry Council (ITI) and the Semiconductor industry Association (SIA), which represents US chip makers, have called on the Biden Administration to provide robust funding for semiconductor manufacturing and research in the US.
SIA president and CEO John Neuffer said in a statement issued last week that US President Joe Biden should seize “a historic opportunity to invest boldly in domestic semiconductor manufacturing incentives and research initiatives” for long-term US prosperity and security.
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These voices came at a time when the Chinese government has redoubled efforts to grow its domestic semiconductor industry to cut reliance on imported chips after Washington tightened restrictions of hi-tech exports to Chinese companies such as Shenzhen-based Huawei Technologies Co and Shanghai-based Semiconductor Manufacturing International Corp (SMIC).
Cotton, a China hawk who was among several US Republican lawmakers sanctioned by Beijing last year in retaliation for US sanctions imposed on Hong Kong and mainland Chinese officials, views China’s rising prowess in cutting-edge technologies as a threat to the US’s commercial and military advantages.
In the report, Cotton proposed that the US government should expand its technology export bans beyond Huawei and SMIC to include all Chinese end users to thwart China’s quest for advanced chip technology.
Cotton also suggested forming a Western coalition against China in trade of 5G technology and semiconductors, in a move that would be similar to the Committee for Multilateral Export Controls (Cocom), a scheme which blocked Western exports of hi-tech products to communist bloc countries during the Cold War.
China made more chips in 2020, but also imported more
By the end of last year, China had already built the world’s largest 5G network, with about 720,000 5G base stations. In semiconductors, Beijing is providing qualified projects with generous subsidies, tax incentives and policy supports with the goal of cutting reliance on imported chips.
It is unclear how far the Biden administration will go in financially supporting the US semiconductor industry and whether it will relax China’s access to US technologies that were tightened under former US president Donald Trump. However, a global shortage of chips for cars and electronics have made the case that the US must boost its own production capacity.
In Beijing, Cotton’s advocacy of “targeted decoupling” and a “economic long war”, as laid out in the Beat China report, met with fury. The Global Times, a state-controlled nationalist tabloid, said Cotton’s language “has reached Nazi levels of racism” and blamed him for “dreaming of a zero-sum conflict”.
