China ‘concerned’ over US moves on mature chips

Business news | January 15, 2024

By Peter Clarke

semiconductor China

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Wang Wentao, China’s minister of commerce, phoned US Secretary of Commerce Gina Raimondo on January 11 and expressed “serious concerns” about US investigations into the supply chain of mature process chips.

The US has been placing a number of advanced semiconductor technologies and products under export licensing requirements; an effective ban on sales into China.

The US Department of Commerce is now threatening to target legacy chips, according to a statement on the Ministry of Commerce website. The statement said Wang also protested at the established US restrictions on third-party exports of photolithography machines to China and other sanctions that suppress Chinese companies.

The call was intended to focus on the implementation of a consensus reached at a heads-of-state held meeting in San Francisco in November 2023. That meeting covered in-depth and pragmatic communication on economic and trade issues.

Survey

However, since then the US Commerce Department said on December 21 that its Bureau of Industry and Security (BIS) would launch a survey in January 2024 to identify how US firms are sourcing current-generation and legacy chips.

Raimondo said at that time that the US had seen signs that China might help chipmakers based there expand legacy chip production and make it harder for US suppliers to compete.

In November the Taiwan-based market analyst TrendForce had warned that China – having been frustrated by US sanctions at the leading edge – was doubling down on legacy chip manufacturing despite signs of excess supply (China wafer production increase coming despite overcapacity).

The BIS office within the DoC estimates the Chinese government has provided its domestic chip makers with about US$150 billion in subsidies over the last decade. The office has said these subsidies are likely to drive below-market pricing for legacy chips and create a non-level playing field for competitors from the US and elsewhere.

According to the DoC, Raimonda told Wang: “The US government’s ‘small yard, high fence’ approach is not about containing China’s economic development. Rather, it aims to safeguard our national security and values without unduly limiting trade and investment.”