Panel Warns of China’s Threat to Chipmakers

The U.S. can mitigate China's semiconductor push by stepping up the pace of innovation, a presidential panel reports.
Matthew HellerJanuary 6, 2017
Panel Warns of China’s Threat to Chipmakers

Chinese industrial policies pose a “real threat” to the U.S. semiconductor industry, according to a report by a presidential panel that recommends the U.S. respond by stepping up the pace of innovation.

The Chinese government unveiled a plan in 2014 to achieve a leadership position in the chip industry by 2030, using industrial policies backed by more than $100 billion in government investment.

The report by the President’s Council of Advisors on Science and Technology warns that China’s “concerted push … threatens the competitiveness of U.S. industry and the national and global benefits it brings” and the U.S. “will only succeed in mitigating the dangers posed by Chinese industrial policy if it innovates faster.”

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“Chinese policy exploits headwinds currently facing semiconductor innovation: if the leading edge is advancing slowly, that makes it easier for China to use industrial policies to get technologically close enough to supplant the innovation leaders economically,” the report notes.

President Barack Obama in October convened a working group of semiconductor veterans to study the top issues affecting the chip industry in the U.S. The group provided recommendations to PCAST for its report.

The council recommended a three-pronged strategy for addressing the Chinese challenge — push back against “innovation-inhibiting” Chinese industrial policy, improve the business environment for U.S. chip companies, and “help catalyze transformative semiconductor innovation over the next decade.”

To drive innovation, the report proposes “a series of ‘moonshots ‘ — such as 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 our industry and the significant challenges it faces, including the rising cost and complexity of innovation and challenges from competitors abroad, most notably ambitious Chinese industrial policy.”

“It remains to [Donald] Trump to decide what to do about the report, but the incoming U.S. President has indicated he wants to invest in the country’s infrastructure,” VentureBeat said.

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