The U.S.-China Chip War: The Impact of the U.S. CHIPS and Science Act and China's Response
The main content of the CHIPS and Science Act in the United States
The CHIPS and Science Act mainly includes three parts, the CHIPS Act of 2022, which provides $52.7 billion in subsidies to chipmakers; the Research and Development, Competition, and Innovation Act, which aims to increase U.S. investment in research and talent development; The third part is a series of restrictive clauses, the most notable of which is the "guardrail clause" against China.
According to this clause, companies receiving federal subsidies are not allowed to expand their advanced process chip production capacity in China for 10 years, otherwise they will be required to refund the full amount of the subsidy. This will undoubtedly hinder Chinese companies from accessing advanced chip manufacturing technology. There are also restrictions on joint research and development and technology transfer with China, aiming to cut off China's ties with international advanced technology.
The reason why the United States pushed the bill
The United States introduced this bill mainly due to the following considerations:
Revive the local chip industry and move away from dependence on Asian supply chains. Due to cost and other factors, the U.S. chip manufacturing industry has moved out in the past few decades, leading to the hollowing out of the industry. With large subsidies, the United States hopes to re-entice chipmakers to invest in the country.
Ensure leadership in key technology areas and contain China's catch-up. Semiconductors are the cornerstone of cutting-edge technologies such as artificial intelligence and supercomputers, and they are also the core of modern military equipment. The United States hopes to maintain its advantage in these areas through restrictive measures that will hinder China's access to advanced chip technology.
Dealing with political pressure within both parties. In the United States, it is a bipartisan consensus to strengthen the containment of China's science and technology. By passing this bill, the Biden administration could balance bipartisan demands and win domestic support.
The impact of the bill on the global chip industry pattern
The CHIPS and Science Act will have a profound impact on the global chip industry landscape:
The global chip supply chain will be further fragmented. The U.S. domestic chip industry will be developed by subsidy policies, but Chinese companies will be marginalized and will have little access to advanced technology. This will exacerbate supply chain fragmentation and affect global chip trade.
The development of Chinese enterprises will be seriously hindered. Chinese companies will not only find it difficult to obtain advanced process technology, but will also be limited in terms of talent and capital. This will slow down the pace of development of China's semiconductor industry.
The global chip supply will face a tight supply. Due to the split between China and the United States, global chip production capacity will decline, and the supply shortage will intensify. This may push up chip prices and affect the development of downstream industries.
Scientific and technological innovation will be hindered. Due to the technological blockade, the exchange and cooperation between Chinese and American researchers will be limited, which is not conducive to the promotion of scientific and technological innovation.
China's response
In the face of U.S. chip containment, China will respond in the following areas:
Increase investment in the local chip industry. China has set up a national chip fund of hundreds of billions of yuan to support the development of domestic enterprises. At the same time, it will also increase fiscal and taxation policy support to create a good development environment for enterprises.
Accelerate the process of chip localization. China will focus on promoting the localization of 28nm and below process chips, striving to achieve self-sufficiency in the field of traditional chips, and at the same time, it will also keep catching up with advanced process technology.
Strengthen scientific and technological cooperation with U.S. allies. China will actively carry out chip technology exchanges with Europe, Japan and South Korea and other places, and seek ways to break through the technology blockade of the United States.
Improve the system of independent innovation in science and technology. China will further increase investment in basic research, cultivate high-end scientific and technological talents, enhance its ability to innovate independently, and reduce its dependence on foreign countries.
Develop emerging technologies and open up new tracks. China will increase investment in emerging technologies such as quantum computing and biochips to open up new development paths.
The semiconductor industry is an important support for national strength, and it is also the main battlefield of Sino-US scientific and technological competition. The U.S. CHIPS and Science Act aims to curb the development of China's semiconductor industry and maintain its dominant position in this field. This will exacerbate the fragmentation of the global chip supply chain, affect the development of downstream industries, and be detrimental to global scientific and technological innovation.