Analysis | Why China Has the US Congress Focused on Computer Chips –

Pictures of mobile devices on Tuesday, January 11, 2022 at the Taiwan Semiconductor Manufacturing Company (TSMC) Innovation Museum, Hsinchu. The largest chip foundry in the world. Photographer: I-Hwa Cheng / Bloomberg (Bloomberg)

A rare bipartisan consensus in Washington is their willingness to spend more than $ 50 billion to increase chip production in the United States. It is a key piece of the bill in both houses of Congress that aims to increase the competitiveness of the United States with China. The accounts are similar but not the same and the difference in secondary issues threatens their progress.

What does the 1st Congress offer us?

Both the Senate bill passed last June and the House bill passed on February 4 provide $ 52 billion in five-year emergency funding for semiconductor research and development, manufacturing of inherited chips, and research on semiconductors. packaging and the development of microelectronics. (Heritage chips are often used in automobiles, airplanes, and various military equipment.) The vast majority of this amount, $ 50 billion, will be redistributed through a new fund overseen by the Department of Commerce; The remaining $ 2 billion will be controlled by the Department of Defense. Additionally, the in-house edition provides $ 45 billion in grants and loans to support supply chain sustainability and the production of critical goods in the United States. Standards and technologies.

2. Why is it necessary?

Although the US is a leader in chip design, about 90% of global chip manufacturing capacity is located elsewhere, particularly Taiwan and South Korea. This puts the US at high risk of supply chain delays. in the event of trade disputes, military conflicts or pandemics such as in the past two years. China’s state industrial policy, which aims to ensure self-sufficiency at all stages of chip manufacturing, also threatens the competitiveness of the United States. The Chinese government plans to increase domestic production using government subsidies and tax cuts.

3. What is the difference between the House and Senate bills?

The House bill includes $ 8 billion over two years in the Green Climate Fund, a United Nations oversight initiative to help developing countries cope with climate change. Republicans oppose it; Texas Representative Michael McCall said the money will be transferred to the United Nations Slus Fund. The two bills also take a different approach to creating a new direction for the National Science Foundation, a federal agency that funds basic research in science and engineering. The Senate version will focus on technology issues. The House bill will focus on research and development to address social issues such as climate change and inequality.

4. What is the purpose of the bills against China?

None of the bills explicitly state that the US is vying for semiconductor dominance with China, but that is how lawmakers regularly describe bills. Majority leader Chuck Schumer said last May that the Senate bill “would allow the United States to develop countries like China in critical technologies such as semiconductors.” Any doubts that China is the main target of the bills are resolved by a large number of non-semiconductor provisions.

5. What are these provisions?

Both bills include funding to develop alternatives to Chinese 5G telecom equipment, which the US fears could be used for cyber attacks or espionage. (China denies this.) Both bills would impose sanctions on China, especially Muslim Uyghurs in the far west of the Xinjiang region, and promote the US State Department’s Special Coordinator for Tibet. The Senate bill requires US institutions to treat Taiwan’s elected government as the “rightful representative of the Taiwanese people” and to stop using the Chinese-preferred term “Taiwanese government”. The Senate will impose further sanctions on China for cyber attacks and theft of trade secrets. The House bill would allow Hong Kong residents to apply for temporary protection status in the United States and extend the export ban on certain crowd control equipment to the Hong Kong police. Since the Senate passed the bill in June last year, Chinese lawmakers have said the law “undermines China’s development path and domestic and foreign policy” and “interferes in China’s internal affairs under the banner. of innovation and competition “.

6. What are the expectations?

There is broad consensus on the need to support in-house chip manufacturing and research, as both bills would do. The bipartisan group has written a letter to more than 140 lawmakers in the House and Senate to make sure the $ 52 billion receipt is included in any final bill that comes out of the negotiations. House Majority Leader Stan Hoyer, a Democrat from Maryland, said in March that he hoped the legislation would be completed in the coming months. The Biden administration said it supports both houses in reconciling their differences and putting the bill on the president’s table “as soon as possible”.

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Source: Washington Post

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