US Chip Deal Would Stop Companies From Expanding Advanced Chip Production in China

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US Chip Deal Would Stop Companies From Expanding Advanced Chip Production in China

The US passed a major piece of legislation aimed at revitalizing US semiconductor manufacturing, but it also does much to inhibit China’s chip industry.

The semiconductor bill reserves approximately $52 billion to help companies build factories and foundries in the US. As Bloomberg points out, however, a major clause of the bill would preclude any company that accepts the funds from expanding advanced chip production in China.

The terms of the bill would prohibit companies from increasing production of chips that are more advanced than 28-nanometer designs in China, or other countries of concern, such as Russia. The restriction is in effect for ten years. Companies would still be able to get exceptions to produce 28-nanometer chips for China and other countries of concern.

Compared to modern chips, 28-nanometer designs are several generations old, first produced at TSMC in 2011. Nonetheless, the chips are still used in some smartphones and automobiles.

It remains to be seen what the long-term impact would be on China’s semiconductor industry, but the move is sure to exacerbate already tense relations between China and the US. The restrictions could also limit TSMC, Intel, and other companies growth since China is currently the world’s largest semiconductor market.

Ultimately, some chipmakers may decide the additional funding isn’t worth the long-term cost.

US Chip Deal Would Stop Companies From Expanding Advanced Chip Production in China
Matt Milano

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