US extends China trade war to SiC, legacy chips
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The US is extending its trade sanctions against China to cover silicon carbide and legacy semiconductor devices on older process.
The Office of the U.S. Trade Representative announced a Section 301 investigation on Christmas Eve to examine China’s targeting of foundational semiconductors (also known as legacy or mature node chips) for dominance and the impact on the US economy. It is also banning the use of chips from certain Chinese fabs from being used.
However it is also using the National Defense Authorization Act that prohibits executive agencies from procuring or obtaining products and services that include chips from certain Chinese fabs and other entities of concern that will be most significant. The US government tis the world’s largest buyer of chips.
This extends the existing restrictions on leading edge semiconductor and AI technologies such as EDA tools, chips and lithography equipment shipping into China, but recent data has also shown the growth in SiC startups that are targeting both electric vehicles and renewable energy systems.
“The People’s Republic of China (PRC) routinely engages in non-market policies and practices, as well as industrial targeting, of the semiconductor industry that enables PRC companies to significantly harm competition and create dangerous supply chain dependencies in foundational semiconductors,” it said.
The move includes silicon carbide (SiC) devices, which, coupled with the focus on the US semiconductor supply chain, is seen as a move to protect companies such as Wolfspeed and Microchip Technologies which have been struggling as well as the Bosch SiC plant in California.
“[This is] additional action to protect American workers and businesses from the PRC’s unfair trade practices in the semiconductor sector and support a healthy domestic industry for foundational semiconductors,” it said.
The investigation will initially assess the impact of the PRC’s acts, policies, and practices on the production of silicon carbide substrates or other wafers used as inputs into semiconductor fabrication.
“This Section 301 investigation will examine a broad range of the PRC’s non-market acts, policies, and practices with respect to the semiconductor sector, including to the extent these semiconductors are incorporated as components into downstream products for critical industries like defense, automotive, medical devices, aerospace, telecommunications, and power generation and the electrical grid,” it said.
The US government is releasing a Request for Information (RFI) to gauge the best ways for government contractors to scale up their use of domestically manufactured chips, particularly for critical infrastructure. This is looking at ideas from industry that may inform future policymaking in support of existing manufacturing capacity.
This also includes dual or multiple source deals, increasing transparency for critical infrastructure supply chains, and providing the government’s demand for the products and services that use these chips.
This will have global impact, as companies such as Infineon Technologies and STMicroelectronics are also key suppliers of SiC and legacy devices.
“Semiconductor supply chains are critical not only to the United States but to all of our allies and partners. The administration has closely consulted with allies and partners on promoting economic resilience and addressing the PRC’s non-market practices in the semiconductor supply chain,” it said.
This includes deals with Costa Rica, Panama, Vietnam, Indonesia, India, Kenya, the Philippines, and Mexico to promote semiconductor supply chain development, security, and diversification.
The Department of Commerce also announced the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience with 13 diverse partner countries across the Indo-Pacific to coordinate more resilient supply chains for semiconductors and other industries.
However the in-coming Trump administration may look to use tariffs instead.
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