Recent US sanctions on sales of chips and chipmaking gear to Chinese companies have left US chip executives silent for the most part. Some have reacted, but only in generalities.
The sanctions and other China trade policies invoked recently by the Biden administration trend along the same lines undertaken by the Trump administration and are justified largely over national security concerns. Those concerns include China’s ability to sell US-made chips and other electronics into missiles and deadly arms used by Russia and other foes of the US.
In several conversations with US chip executives, three who asked not to be named recently told Fierce Electronics they want to believe US officials who say there are national security threats, but these CEOs have no handle on how serious or immediate those threats are.
They expressed frustration and nervousness over being left mostly in the dark by US officials and worry cracking down on semiconductor products sold into China could be conflated into a loss of access to IP and talent, or even become the basis of a stiffer, meaner trade war in coming years—if not worse.
“No good can come out of making a country with 1.2 billion people our enemy,” one chip industry official told Fierce Electronics.
Universally, leaders of US chip companies have praised the Biden administration’s efforts to work with Congress to pass bi-partisan legislation approving $52 billion for construction of new chip fabs in the US. The signing of the US Chips and Science Act in August has spurred commitments by Intel, Micron, IBM and even TSMC based in Taiwan to build fabs worth billions in the US. Companies such as Apple, Qualcomm and Nvidia that rely on the advanced chips of TSMC to be produced in Arizona will benefit.
However, CEOs have expressed a longer-term concern that not only will revenues be lost with fewer sales of chips and chipmaking equipment into China, but that a free exchange of ideas with researchers in China—much less research talent for US jobs—will slowly ground down and perhaps stop. Turning inward with chip manufacturing has raised fears of bifurcation or decoupling, where East and West are separated, and the advantages of a global technology ecosystem are lost.
“The concept of decoupling [from China] is such a dangerous concept. We are all in this together,” said Jodi Shelton, CEO of the Global Semiconductor Alliance, an organization comprised of 300 global members. “Are we decoupling on climate controls and improvements, too, and how far do you really take it? And does it have unintended consequences of strengthening the very Chinese companies you are trying to affect?” she said in an interview with Fierce Electronics.
Raimondo speaks
In defense of the Biden administration, US Commerce Secretary Gina Raimondo roundly defends administration trade policies with China. In prepared remarks Nov. 30, she touched on a multi-pronged approach to help US companies become more competitive with China, including through the CHIPS Act and recent sanctions.
“China today poses a set of growing challenges to our national security,” Raimondo said. “It is deploying its military in ways that undermine the security of our allies and partners and the free flow of global trade. It dominates the manufacturing of critical materials and goods and has exploited other economies’ dependence of its market…It seems to dominate certain advanced technology sectors, while using many of those technologies to advance its military modernization and undermine fundamental human rights at home and abroad.”
The administration’s October sanctions, she continued, “impose systematic and technology-specific export controls to limit China’s ability to purchase and manufacture certain very advanced computing chips used to train large-scale artificial intelligence models and which power the country’s advanced military and surveillance systems, as well as manufacturing equipment used to make these cutting-edge chips.”
Defending those sanctions, Raimondo said America’s export control strategy had for too long been “reactive and focused on preventing China from expanding its technological capabilities after it accessed American intellectual property. “ Going further, she said the Biden administration’s new rules are “strategic, targeted and designed to protect our national security.”
Raimondo even doubled down on concerns about not wanting to decouple the US economy from China. “We want to promote trade and investment in areas that do not threaten our core economic and national security interests or human rights values,” Raimondo asserted. Citing Biden’s meeting with Chinese President Xi on Nov. 14, she said the US wants to work with China on “issues of global economic importance, such as climate change, food security, health security and debt relief.”
Immigration of tech talent
While Raimondo ticked off investments in chip manufacturing, she addressed ways to invest in the tech talent pipeline, including through investments in R&D funding at universities outside of major research centers and STEM education. There are currently 300,000 students from China studying in the US, she noted. “We will continue to welcome Chinese students and immigrants and we won’t hesitate to stand up to racism against people of Chinese heritage,” she declared.
The Biden administration has announced measures to streamline its immigration process and open pathways for international STEM students and researchers. Yet, Raimondo conceded, “there is so much more to do,” adding she is ready to work with industry and Congress on reforms.
In a more recent televised CNN interview with Fareed Zakaria, she added, “We need a more sensible immigration policy. I hope we can find a way toward sensible immigration reform that welcomes highly skilled folks to study and work in the US.”
For its part, the GSA endorses the need for immigration reform, a longstanding concern of the entire semiconductor community. “We definitely believe the US should look at immigration reform. Our industry is spread across the globe and half the CEOs at US chip companies are foreign born,” Shelton added.
“We want to make sure foreigners in the US feel comfortable to study and have a career here if they choose to do so,” Shelton added. Without needed reforms, Chinese workers in the US can feel “really uncomfortable…You don’t want anti-Chinese sentiment to be present in our industry. With a trade war between the US government and China, I’m worried ‘anti-China’ could become anti-Chinese.”
Several executives interviewed for this article said they believe the issues between China and the US involve national security concerns but go further and are potentially more complex with issues concerning needs of the labor pool of technology professionals. Without enough workers, there won’t be sufficient chips to build advanced technologies, obviating the US susceptibility to security concerns, their concerns go.
Survey of chip executives
A recent GSA-KPMG survey of 151 global chip executives found the risk of not having enough skilled workers and the struggle to find talent is the biggest issue facing the semiconductor industry over the next three years. That concern was far ahead of their concerns over supply chain disruption and territorialism, a term uses to reference nationalization of chip technology and IP. The talent risk was also ahead of their concerns over cyber security, global inflation and ramifications of the Russia-Ukraine war.
“In general, CEOs everywhere-- in China or the US-- question how they can sustain growth for decades with dwindling numbers of engineers,” Shelton said. “The US has a shortage as well as Taiwan and China.”
To help, GSA has pursued a women’s leadership initiative that promotes the concept of semiconductor-related jobs in STEM education. “We have ignored 50% of the population,” Shelton added.
Global Semiconductor Alliance focus
In addition to GSA’s 300 members, its newest board chair is Matthew Murphy, CEO of Marvell Semiconductor. The board members come from many of the world’s largest chip designers and manufacturers, including Intel, Samsung, ARM, AMD, TSMC, Micron, Qualcomm, Microsoft, ChangXin Memory, SMIC and more.
Chip executives told FE it is impossible to know the full ramifications of Biden administration trade actions related to China and so they prefer, instead, to remain focused on promoting broader ideals.
“GSA focuses on open standards, equal access to markets and protection of IP,” Shelton said. “In the best possible scenario, countries collaborate.”
All of the chip executives agreed they are glad President Biden and President Xi met recently and lines of communications appear to remain open.
At their Nov. 14 face-to-face meeting in Bali, President Biden set the tone. “The world has come to a crossroads. Where to go from here—this is a question that is not only on our mind but also on the mind of all countries,” President Biden said. “The world expects that China and the United States will properly handle the relationship.”
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