China semiconductor group slams US Chips and Science Act

The China Semiconductor Industry Association (CSIA), the state-backed trade group behind the mainland’s integrated circuit industry, has denounced the United States’ Chips and Science Act as a violation of fair trade, while warning that this law could lead to “chaos” in global supply chains.

The CSIA’s statement, which was released on Wednesday in both Chinese and English, joined the chorus of Chinese state media, trade institutions and government voices that have already condemned the recently enacted law, which enables Washington to dangle nearly US$53 billion in incentives to lure more semiconductor manufacturing to the US. Beijing sees the law as a threat to both China’s access to advanced technology needed by its chip sector and the country’s role in supply chains worldwide.

The association, which represents 744 member-firms in China’s semiconductor sector, said the Chips and Science Act, which US President Joe Biden signed into law last week, violated shared principles of fair, open and non-discriminatory practices in the industry.

While “deeply saddened” by this development, the CSIA warned that the law’s passage “will inevitably lead to chaos in the global semiconductor industry”. It called on the US to “correct its mistakes” and show respect to order in the international chip sector.

The CSIA, headed by former Semiconductor Manufacturing International Corp chairman Zhou Zixue, also indicated that the new US law harms the spirit of the World Semiconductor Council’s charter, as well as that of the World Trade Organization (WTO).

The council, founded on June 10, 1999, promotes international cooperation in the semiconductor industry to facilitate healthy growth over the long term, according to its website. Its members include semiconductor associations in the US, South Korea, Japan, China, Taiwan and across Europe.

Last December, China marked its 20th year as a member of the WTO.

The CSIA’s statement reflects the urgency faced by China in dealing with the new US law, which could bolster Washington’s efforts to form the so-called Chip 4 Alliance – a partnership that includes South Korea, Taiwan and Japan.

Beijing considers that alliance as a plot by the US government to exclude China from global semiconductor supply chains.

The size of incentives that Washington can now provide semiconductor manufacturers may threaten to prevent major companies, such as memory chip giants Samsung Electronics and SK Hynix, from further investing in China.

Under the US Chips and Science Act, subsidy recipients are barred from expanding production in China beyond “legacy semiconductors” – defined as chips made with 28-nanometre process technology or older – for 10 years.

That could set back China’s initiatives to reduce reliance on imported chips, which cost the country more than foreign crude oil. South China Morning Post