"NEW YORK – The Biden administration’s unprecedented package of bans on chip and chip equipment sales to China announced on October 7 could not have come at a worse moment for the global semiconductor industry.driving, cloud computing and other efforts to digitize China’s economy.
The damage to capital investment and R&D in the Western semiconductor industry will exceed Washington’s modest subsidies for the chip industry by a factor of five or more.
The US measures won’t affect China’s sensors, satellite surveillance, military guidance and other strategic systems because the vast majority of military applications use older chips that China can produce at home. But it may postpone autonomous
It will also elicit an all-out Chinese effort to replace American chip-making and design technology. CapEx and R&D will shrink drastically in the US semiconductor industry while China allocates a massive budget to the sector.be greater than the harm inflicted on China.
On a five- or ten-year horizon, America’s technological edge in semiconductor design and fabrication is likely to vanish. As capital budgets collapse in the Western semiconductor industry, the damage to the US and other Western economies is likely to
The Biden administration meanwhile proposed a 14% budget cut for the Defense Advanced Research Projects Agency (DARPA), which is a much larger cut after inflation. Starving US high-tech industry of public as well as private funds is a strange way toconduct a strategic rivalry with China.
The incipient global recession turned the chip shortage of 2021 into a glut, reflected in a collapse of the Philadelphia index of semiconductor stocks (PHLX) by nearly half during 2022. NVIDIA, the leading US chip designer, has lost 68% of its marketcapitalization so far this year.
The industry had already cut capital investment plans from about US$200 billion to $160 billion for 2022. US restrictions on exports of semiconductor equipment, design tools and high-end chips to China will shrink revenues further, putting an airpocket into R&D and capital expansion. The world’s dominant chip fabricator, Taiwan’s TSMC, planned $44 billion in CapEx just six months ago but on Wednesday announced a cut to $36 billion.
The Biden administration’s $50 billion, five-year subsidy for onshore chip fabrication will help firms that use older technology to supply the US defense industry, which mainly buys chips five to seven generations behind the cutting-edgesemiconductors targeted by the new round of US sanctions.
Smaller American fabricators like GlobalFoundries and SkyWater Technology, who make chips for the US military several generations behind the present state of the art, will benefit from the Biden subsidies. But companies with the most advancedtechnology have the most to lose, including American manufacturers of chipmaking equipment."
https://asiatimes.com/2022/10/china-chip-ban-a-us-exercise-in-extreme-self-harm/
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