Chip CEOs meet US officials to discuss China semiconductor policy

Top executives from leading U.S. chip companies convened with senior Joe Biden administration officials on Monday to discuss China policy, as concerns grow over potential curbs on the semiconductor industry, Reuters news report said.
Global semiconductor sales reached $574 billion in 2022, and U.S. semiconductor companies accounted for sales totaling $275 billion, or 48 percent of the global market. U.S. semiconductor firms also invested $58.8 billion in R&D, the highest in history, a report from the Semiconductor Industry Association said in May.

The State Department confirmed that Secretary of State Antony Blinken engaged in conversations with chip company CEOs regarding the industry and supply chains following his recent visit to China. Other government officials, including Commerce Secretary Gina Raimondo, National Economic Council director Lael Brainard, and National Security Council director Jake Sullivan, also met with representatives from Intel, Qualcomm, and Nvidia.

The chip industry is eager to safeguard its profits in China, particularly as the Joe Biden administration contemplates additional restrictions on chip exports to the country. In 2022, China accounted for over $180 billion in semiconductor purchases, comprising more than a third of the global total of $555.9 billion, making it the largest single market, according to the SIA.

Semiconductor Industry Association, based in the U.S., called on the Joe Biden administration to refrain from imposing further restrictions on chip sales to China. The SIA urged the administration to allow the industry to maintain access to the Chinese market, which is the world’s largest commercial market for commodity semiconductors.

The discussions between government officials and chip industry leaders encompassed the acceleration of government funding allocated to semiconductor firms under the CHIPS Act and ensuring that U.S. policies do not hinder chip companies’ access to the lucrative Chinese market.

Commerce Secretary Raimondo is overseeing the implementation of the $39 billion CHIPS Act semiconductor manufacturing subsidy program, which was approved by Congress last year. Additionally, the law includes a 25 percent investment tax credit, estimated to be worth $24 billion, for the construction of chip plants.

The U.S. government is also focusing on China’s access to advanced artificial intelligence (AI) chips, with plans to tighten regulations concerning the computing speed of such chips. However, specific thresholds have not yet been determined.

These meetings occurred in the wake of China’s recent move to limit the export of raw materials used in chip production, such as gallium and germanium. Secretary of State Blinken reportedly addressed this matter during his conversations with the CEOs.

Notably, Nvidia, Qualcomm, and Intel have significant stakes in China, with Qualcomm being the sole company possessing a license from U.S. regulators to sell mobile phone chips to Huawei Technology. Nvidia has introduced an AI chip specifically tailored for the Chinese market, which has gained traction among major Chinese firms. Intel’s CEO, Pat Gelsinger, also traveled to China last week to announce the company’s own AI chip offering in the country.