Semiconductor industry pushes back against US export controls
A week ago Reuters reported that senior officials within the Trump administration had agreed to new measures to restrict the global supply of chips to Huawei. This was despite the fact that President Trump had previously tweeted dismissing the idea (see US reconsiders restricting China’s chip supply).
Now Reuters reports that nine industry groups – including SEMI, the SIA and the National Foreign Trade Council – have signed a letter sent Monday April 6 to US Commerce Secretary Wilbur Ross asking him to allow public comment before putting the rules into effect to “avoid unintended consequences.”
The letter states that rule changes could “result in significant impacts to the semiconductor industry, its global supply chain, and the broader technology sector,” Reuters says. And the signatories did not shy away from mentioning the importance of the semiconductor industry to fighting Covid-19.
The regulation that has been amended is the Foreign Direct Product Rule, which subjects some foreign-made goods made using US technology or software to US regulations. In the semiconductor sector this would effectively give the US government the right to stop chip companies around the world from sending chips to HiSilicon/Huawei in China. Leading foundry TSMC, which supplies 5G and smartphone leader Huawei, is thought to be foremost target of the rule change.
Amid the heightened tension brought on by the Covid-19 pandemic it is thought that the US president might be minded to rachet-up the intensity of the US-China trade dispute. However, the loss of Chinese markets could have a crippling effect on chip companies in the US and around the world, the letter writers argue.
China represents about one-third of the semiconductor market. About 15 percent of TSMC’s revenue is thought to come from Huawei and 30 percent from China. Overall China represents about one-third of the semiconductor market.
Next: Second letter
Reuters reports the letter arguing that semiconductors are at the heart of medical equipment enable telework.
Ajit Manocha, president of industry body SEMI, sent another letter on Friday to President Trump, saying the change would hurt US exports of chipmaking equipment worth more than $20 billion per year.
The move would “serve as a disincentive for further investments and innovation in the U.S. and lead to the design-out of U.S. technology and components,” Reuters reports Manocha as writing. He also said that the move create uncertainty in supply chains “critical to fighting the Covid-19 pandemic.”
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