Why U.S. Is Worried About China's Chip Industry

China's chip industry comes at pair with top Western chip manufacturers. Photo : Photo by Justin Sullivan/Getty Images

Worried about China's progress in the chip industry, the White House has created the Semiconductor Working Group with the aim to encourage homegrown chip development.

U.S. Warns China To Play Fair

Nations are competing to build the world's fastest supercomputers and at the center of that race are homegrown chips. Supercomputers can help with scientific simulations, weapons development, scenarios critical to national security and economic projections. Advanced semiconductors are also of crucial importance for the development of satellites, drones, robots and self-driving cars. Most consumer electronics have also semiconductors as their building blocks.

According to PC World, the battle between China and the U.S. government is now stepping up in the market for semiconductors. The U.S. claims that China is indulging in unfair trade practices and rigging the semiconductor market in its favor. During a Wednesday event organized by the Center for Strategic and International Studies, Penny Pritzker, U.S. secretary of commerce, said that this unprecedented state-driven interference in the chip industry can undermine the innovation ecosystem and distort the market.

According to U.S.' claims, the Chinese government is hurting global competition by using its own resources to artificially reduce chip prices. The U.S. government called on China to play in accordance with "global trading rules," with free and fair trade and healthy competition. According to the American point, state investments can bring distortion on global markets.

The U.S.' Push For Homegrown Chip Development

In order to maintain leadership in the semiconductors industry, the U.S. government needs to take its own strategic measures. But in a free market economy, the U.S. government is just an enabler for innovation and competiveness in the chip market and not a "driver" like the Chinese government.

The U.S. needs tax reform, strong trade policies, and high-skilled immigration reform, according to John Neuffer, president and CEO of the Semiconductor Industry Association. To meet the challenges from China, the U.S. should also increase its support on research in universities, added Ted Dean, assistant secretary of commerce, industry, and analysis at the U.S. Department of Commerce.

A new U.S. government working group has been created with the aim to encourage domestic companies to resist the urge to buy inexpensive Chinese semiconductors and use homegrown chip technology instead. According to Computerworld, the White House has established this week the Semiconductor Working Group, a private-public advisory organization that will create research and policy guidelines for semiconductor development. The ultimate goal of this governmental initiative is to retain American leadership in semiconductor technology.

According to the White House's official blog, John Holdren, director of the White House Office of Science and Technology Policy considers that the U.S. economy and even the national security can be significantly affected by an eventual loss of leadership in semiconductor innovation and manufacturing. Holdren is also critical on the policy of some countries that dump inferior chip technology on U.S. companies, while subsidizing their domestic chip development.

As a means to ensure the continuation of American leadership in the semiconductors industry, the working group is encouraging the development of new types of computers. Among them are neural chips mimicking the functionality of the human brain, as well as quantum computers that could eventually replace today's chips and PCs.

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