Electronics

A few days ago, the US "Chip Act" was passed in both houses of Congress. This bill has undergone several revisions and adjustments, and was finally named the "Chip and Science Act of 2022", which will be formally enacted after US President Biden signs it on August 9. The bill totals $280 billion and will be implemented over five years. It is worth noting that the bill not only attempts to attract semiconductor companies to set up factories in the United States through investment subsidies, but also intends to prevent semiconductor companies from increasing production in China by restricting the eligibility of subsidies.

Suppressing Chinese chip technology companies, coercing TSMC and other chip giants to invest and set up factories in the United States, and trying to form a small circle of "chip quadrilateral alliance"... A series of "wall-building" and "decoupling" practices in the United States are full of hegemonic logic and Cold War mentality. Disrupting the global chip supply chain.

The product of a bipartisan compromise

The Chip and Science Act of 2022 is 1,054 pages long. The act incorporates elements of economic and national security policy and aims to boost the competitiveness of the U.S. technology and chip industries. The report summarizes the main contents of the bill: First, provide about $52.7 billion in financial support to the semiconductor industry, provide companies with investment tax credits worth $24 billion, and encourage companies to develop and manufacture chips in the United States; It provides about 200 billion US dollars in scientific research funding support annually, focusing on supporting cutting-edge technologies such as artificial intelligence, robotics, and quantum computing.

"The 2022 Chip and Science Act is the product of compromise between the Democratic and Republican parties in the United States after a long-term game between the Senate and House of Representatives." Feng Weijiang, secretary-general of the National Global Strategy Think Tank of the Chinese Academy of Social Sciences, sorted out in an interview with this newspaper. The process of passing the bill: In June 2021, the US Senate passed the US$250 billion "American Innovation and Competition Act" to strengthen domestic technology research and development and compete with China, but the bill was shelved in the House of Representatives. On February 4 this year, the U.S. House of Representatives passed the U.S. Manufacturing Opportunity and Technological Excellence and Economic Strength Act of 2022 (the House version of the U.S. Competition Act of 2022); on March 28, the U.S. Senate passed the 2022 Act The U.S. Opportunity for Manufacturing, Technological Leadership, and Economic Power Act of 2020 (the Senate version of the American Competition Act of 2022), which includes the Chip and 5G Emergency Funding Program, the Endless Frontiers Act, and the 2021 The Strategic Competition Act, the Securing America’s Future Act, and the Challenges Act are complex. In this context, the Senate and the House of Representatives need to negotiate to eliminate the differences between the two versions of the bill and launch a compromise version approved by both parties before it can finally be sent to the president for approval. On July 27-28, the Senate and House of Representatives passed the $280 billion Chip and Science Act of 2022.

It is worth noting that the bill also implies a "competition with China" clause. The bill stipulates that if a semiconductor company building a factory in the United States is also building or expanding advanced semiconductor manufacturing plants in China or other potentially "unfriendly countries", the company will not receive subsidies under the bill.

"This bill is a manifestation of the United States' continued pan-politicization and pan-security of economic and technological issues." Jiang Tianjiao, an associate professor at the Development Research Institute of Fudan University, told the newspaper that the United States tried to use the bill to support the manufacturing of the local chip industry and strengthen the research and development of chip technology. In particular, it attaches great importance to the research and development of innovative, high-tech and leading chips, so as to seize the leading position in the future global chip industry chain track. In addition, some provisions of the Act restrict relevant chip companies from conducting normal economic, trade and investment activities in China, forcing relevant companies to choose sides between China and the United States, reflecting the deep-rooted zero-sum game thinking of some people in the United States. In addition, the United States uses the so-called "chip diplomacy" to create a small circle, trying to exclude mainland China from the global chip industry chain.

"In terms of chip manufacturing, the bill reflects that in the United States, the 'security-oriented' national logic overwhelms the 'efficiency-oriented' market logic." Feng Weijiang said that the bill emphasizes the provision of huge subsidies to the domestic chip industry in the United States, which is a typical differentiation Industrial support policies. Some of these clauses restrict the normal scientific and technological cooperation between China and the United States, and use government power to forcibly change the international division of labor in chip manufacturing. These practices violate the laws of the market and will distort the global semiconductor supply chain and disrupt the normal order of international trade.

Coerce chip companies to stand in line

The passage of the "Chip and Science Act of 2022" in both the Senate and the House of Representatives is the result of a combination of factors. Feng Weijiang believes that under the background of the epidemic, the global chip production chain has been interrupted, and there has been a serious shortage of chips in the United States, forcing the two parties to discuss a compromise solution. After a long period of "bargaining", the differences between the two parties were basically resolved, and an agreement was reached on the core consensus content of the bill. If it cannot be passed before the Congress recess in August, after a one-month recess, the bill will face disruptions in the U.S. mid-term elections in November, and it is likely to miss the window for passing it. Under the "deadline effect", the US Congress, especially the Senate Democrats, decided to focus on the chip issue and push the bill to pass.

At the height of the bipartisan debate, the American Semiconductor Industry Association and Oxford Economics released a report, pointing out that the semiconductor industry has a huge pulling effect on the U.S. economy. For every worker employed by the semiconductor industry in the United States, it can indirectly support 6.7 jobs. The Chip and Science Act of 2022 will invest $50 billion to build chip factories, which means that between 2021 and 2026 alone, the semiconductor industry will add 523,000 jobs and $76.3 billion in GDP.

"The bill has been in the works for a long time, and it is no surprise that it passed quickly. The bill reshapes the US's position in the global chip supply chain, enhances the US's technological innovation capabilities in strategic emerging areas, and enhances the US's strategic competitive advantage in China. Promoting the two parties to reach a consensus." Jiang Tianjiao said that in order to promote the passage of the bill, the U.S. government borrowed multiple resources: borrowing the epidemic to impact the global chip supply chain, car chip shortages, and exaggerating the Chinese chip threat theory; the sponsor of the domestic borrowing bill Shu Mo was promoted to Senate Majority Leader, and the chip bill can not only provide thousands of new jobs in the United States, but also allow the United States to regain its commitment to technology leadership; then persuaded the US Democratic Party to abandon the tradition of government non-intervention in the economy through US chip companies , and then through the exchange of interests, won the cross-party support of 17 Republicans including the Republican leader McConnell-with the chip bill as the locomotive, the huge science bill was passed together.

In recent years, in order to reverse the competitive disadvantage of the chip industry in the world, the United States has taken the initiative to suppress the development of the chip industry in other countries.

"One is to restrict China's access to and development of advanced chip manufacturing and design technologies through bilateral or multilateral means. For example, to put pressure on the Dutch government to ask Asmar, the world's largest lithography machine company, to expand the scope of the ban on sales to China; Piece together the so-called 'chip four-way alliance' (the United States, Japan, South Korea and Taiwan), and engage in 'semiconductor barriers' that exclude mainland China; restrict Huawei's business activities on a global scale, and 'stuck the neck' in manufacturing to achieve the abolition of its advanced The purpose of chip design capabilities. The second is to coerce and try to control leading companies in the semiconductor industry. For example, companies such as TSMC, Samsung Electronics, Micron Technology, Western Digital, UMC, SK Hynix and ST Electronics are required to hand over semiconductor supply chain data , to coerce and lure TSMC and other companies to invest and set up factories in the United States." Feng Weijiang believes that these bullying behaviors have impacted the stability of the global chip industry chain and supply chain, disrupted market expectations, reduced the confidence and level of industry investment, and increased the production and operation of the industry. Costs and risks, at the expense of the global efficiency and profits of multinational companies in the semiconductor field, replicate a relatively unadvanced chip manufacturing industry for the United States, hampering the innovation and development of the global semiconductor industry.

Disrupting the chip supply chain

Given the longer time it takes for companies to build new facilities and ramp up production, the bill is unlikely to have immediate practical effects on U.S. domestic supply chains.

"Chip research and development itself is a time-consuming and labor-intensive process, and it is not achieved overnight. After the implementation of the bill, it may not have a significant impact on the development of the domestic chip industry in the United States in the short term. The specific effect remains to be seen and is full of uncertainty. This large-scale US subsidy for chips is also a behavior that distorts market rules, which may eventually lead to a surplus of the chip industry, and may even force the emergence of alternative chip products." Jiang Tianjiao said that when the semiconductor industry was on the rise, the United States once Almost all of the global semiconductor manufacturing capacity is included. Today, the U.S. has only a 12% share of global semiconductor capacity. This huge contrast has become an important reason for some people in the United States to try to reshape their core position in the global semiconductor manufacturing field through this bill, thereby curbing the development of China's semiconductor industry. However, the root cause of the decline of the U.S. semiconductor manufacturing industry lies in itself. Containment, deprivation and damage to the legitimate development rights and interests of other countries will only harm others.

The Center for Strategic International Studies, an American think tank, pointed out that in the complex and highly interdependent global value chain, semiconductor companies in the United States and China have already been deeply integrated. To fully localize the supply chain, it will cost huge economic and technical costs. Therefore, it is very unrealistic to completely "decouple" the global semiconductor industry.

Peter Winnick, CEO of ASML, recently warned: "The world cannot ignore the fact that mainland China's semiconductor manufacturing capabilities are critical to meeting the needs of the global market."

The United States maliciously suppresses China's chip manufacturing industry, how should China respond?

"As far as the chip industry itself is concerned, China should continue to increase its investment in advanced chip manufacturing and design technology." Feng Weijiang pointed out that China should pay more attention to the "science" part of the bill and pay close attention to the key funding of the bill. The progress of cutting-edge scientific and technological fields such as artificial intelligence, robotics, and quantum computing, and pay attention to the guiding role of "competition policy" rather than "industrial policy" in these fields, and vigorously encourage scientific and technological progress and its support for advanced technology industries.

"The United States has always advertised as a supporter and defender of the free market concept, and has even used this as an excuse to attack and smear other countries many times. Now, in order to maintain its own hegemony, the United States has used this act to make many international semiconductor companies choose sides, which shows its hypocrisy. Jiang Tianjiao believes that in this regard, on the one hand, China must use various means to expose and criticize the hegemonic behavior of the United States that violates market laws and disrupts the global chip supply chain, and strives for more support and cooperation from the international community; on the other hand, China must maintain a strategic Determined, more respect for market laws and industrial laws, efforts to promote scientific and technological development and industrial progress, continue to increase efforts to support the development of the semiconductor industry.