Engineering 101

The Potential Downside of Administration’s U.S. vs. China Semiconductor Policy

President Biden was clear—U.S. companies accepting funding under the CHIPS Act will be barred from building leading-edge advanced fabrication facilities in China for 10 years. The government is providing $50 billion under the act. Manufacturers are, however, allowed to expand existing node factories in China, serving the Chinese market, representing older technology that is widely available.

Currently, the U.S. consumes 25% of the world’s most advanced computer chips but does not produce any of them.

The possibility is, however, that China will soon produce its own semiconductors based on standards not compatible with the West. Russia and Iran will likely be their top customers. China will also begin to compete with the U.S. in other markets.

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