Chipmakers Are Right. Cutting Off China Will Backfire.
Tightening restrictions on exports won’t boost US semiconductor production.
Nice idea, bad strategy.
Photographer: Chip Somodevilla/Getty Images
US chipmakers have been in Washington this week pressing the Biden administration to exercise restraint on restricting their business with China. The companies are thinking of their bottom lines, yes. But they are right to warn about cutting Beijing’s access to semiconductors. Putting additional curbs on what semiconductor manufacturers can sell to the world’s second-largest economy will inevitably prompt the Chinese to retaliate and cause tensions with US chip-making allies. Worse, the restrictions threaten to undermine President Joe Biden’s longer-term goals of encouraging more chip manufacturing on US soil.
Biden’s strategy on semiconductors revolves around two tightly woven aims. The first is to scupper China’s ability to get its hands on the semiconductors it needs for military modernization. The second, embodied in the Chips and Science Act he signed into law last year, is to lessen US vulnerability to international supply chain chokepoints in East Asia by incentivizing chipmakers to invest in US-based research, development and production.