Commerce Department initiates review of semiconductor supply chain to assess potential risks from China

The U.S. Department of Commerce has announced a semiconductor supply chain review to reduce national security risks related to China. The review focuses on legacy chips produced with 28-nanometer technology or larger, which are used in various products, including cars, smartphones, military systems, and medical devices.

Commerce Secretary Gina Raimondo emphasized the importance of addressing non-market actions by foreign governments that threaten the U.S. legacy chip supply chain, considering it a matter of national security. The Bureau of Industry and Security (BIS) will launch the survey in January to collect American companies’ sourcing data on legacy chips.

The move comes as a response to concerns over potential practices from China that may expand its firms’ legacy chip production and create challenges for U.S. companies to compete. The survey results are expected to shape further actions to build strong, diverse, and resilient semiconductor supply chains.

Previous reports have highlighted critical chip shortages in legacy chips, with the Chinese government providing an estimated $150 billion in subsidies to its domestic semiconductor industry. China is also the biggest market for U.S. semiconductor companies, raising concerns about the country’s dominance in the market.

The Coalition for a Prosperous America (CPA) has urged the U.S. government to expand export controls from advanced chips to legacy chips, emphasizing the importance of rebuilding capacity in the U.S. and preventing China from dominating the market. The group warns that China’s growing production capability in legacy chips could drive American chip companies out of business.

In response to the concerns, the U.S. government has introduced specific clauses in the final rules for the $39 billion semiconductor production funding under the CHIPS and Science Act to prevent legacy manufacturing expansion in China from accessing the subsidy program. The first grant under the program was awarded on Dec. 11.

The move comes amid growing concerns about China’s influence in the semiconductor industry and efforts to build a resilient supply chain in the face of global challenges. As the U.S. government takes steps to protect its semiconductor industry, the focus remains on ensuring that the country’s critical industries and national security are not compromised by external dependencies.

The survey to gather sourcing data on legacy chips is expected to provide valuable insights for future policy decisions and actions to safeguard the U.S. semiconductor supply chain. With the semiconductor industry playing a crucial role in various sectors, including technology, defense, and healthcare, the measures taken by the U.S. government are aimed at securing the country’s position as a leader in semiconductor innovation and manufacturing.


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