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White House report warns of Chinese threat to US semiconductor industry

The report says the US semiconductor industry needs to innovate and run faster in order to mitigate the threat posed by Chinese industrial policy.

By CBR Staff Writer

A White House report has warned that Chinese industrial policies pose a real threat to the US semiconductor industry.

The report, submitted before US President Barack Obama by the President’s Council of Advisors on Science & Technology (PCAST), argues that the US semiconductor industry needs to innovate and run faster in order to mitigate the threat posed by Chinese industrial policy and strengthen the country’s economy.

It says the US has a range of tools available to respond directly to Chinese activities, including formal trade agreements, informal trade and investment norms agreed to with foreign countries.

Unilateral tools like scrutiny of acquisitions of possible national security concern by the interagency Committee on Foreign Investment in the United States will also play a key role.

The report said: “The existing set of strategies pursued by the Chinese government through its policies brings the effectiveness of these tools, as currently applied, into question, however.”

The US government has been urged to revisit its tools to make sure that they are better semiconductor report white houseplaced to protect against actions that could harm the country’s economic and security interests.

“One way to respond would be to tie U.S. assessments of the national-security threats posed by particular technology exports, investments, and contracts to Chinese policy,” the report said.

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The report recommended a strategy built on three pillars including push back against innovation-inhibiting Chinese industrial policy, improve the business environment for US chip companies and help catalyse transformative semiconductor innovation over the next decade.

To drive innovation, the report proposes a series of moonshots like developing game-changing biodefense systems and cutting-edge medical technologies that have independent merit and would, if achieved, also deliver radical semiconductor advances of much broader applicability.

Semiconductor Industry Association CEO John Neuffer said the report highlights the strategic importance of the US semiconductor industry and the significant challenges it faces, including the increasing cost and complexity of innovation and challenges from competitors abroad, most notably ambitious Chinese industrial policy.

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