Massive government investment in China’s semiconductor industry risks distorting the global market for integrated circuits, leading to damaging overcapacity and stifling innovation, US Secretary of Commerce Penny Pritzker said.
The comments come at a time of growing trade tension between China and the US over accusations of dumping, industrial overcapacity and a souring business climate for foreign firms doing business in China.
Republican US presidential candidate Donald Trump has threatened to levy punitive tariffs of 45 percent on imports of Chinese goods if he is elected.
In a speech on Wednesday, Pritzker sharply criticized a US$150 billion plan by the Chinese government to expand the share of Chinese-made chips in the US market to 70 percent by 2025, from 9 percent now.
“Let me state the obvious: This unprecedented state-driven interference would distort the market and undermine the innovation ecosystem,” Pritzker said at the US Center for Strategic Studies think tank in Washington.
That level of investment would be equivalent to half of worldwide semiconductor sales last year and result in market distortions similar to those plaguing the steel, aluminum and “green” technology industries, Pritzker added.
“The world has seen the effects of this type of targeted, government-led interference before,” she said.
“The result has been overcapacity in the global marketplace that has artificially reduced prices, cost jobs in both the US and around the world and caused significant damage to those industries globally,” Pritzker said.
It was “imperative we take steps to prevent a similar situation from developing in the semiconductor industry,” she added.
Such steps include a US Department of Commerce study of the global semiconductor supply chain now under way, besides engaging with China, and other governments, to persuade them to avoid policies that distort markets or spur technology transfers.
“The US government will make clear to China’s leaders at every opportunity that we will not accept a US$150 billion industrial policy designed to appropriate this industry,” Pritzker added.
On Wednesday, 12 US senators urged that Zhongwang International Holdings Ltd’s (忠旺控股) US$2.3 billion purchase of Cleveland, Ohio-based Aleris Corp be rejected by a national security review panel.
Zhongwang, China’s largest aluminum processor, announced the deal to buy Aleris in August.
Aleris processes aluminum for numerous industries, particularly the auto and aerospace sectors.
It has an auto industry plant in Duffel, Belgium, and is building a new one in the southern US state of Kentucky. Aleris also makes aluminum parts for aircraft bodies and wings in plants in Koblenz, Germany and Zhenjiang, China.
The company also makes aluminum protective plating for military vehicles in Germany, a point on which the senators focused in their letter to US Secretary of the Treasury Jacob Lew.
“In addition, we are seeing new attempts by China to acquire companies and technology based on their government’s interests — not commercial objectives. And we have witnessed attempts to restrict access to China’s domestic market,” Pritzker said.
The technology industry depends on a global supply chain, open and fair trade, and innovation, she said.
“China’s effort to move up the value chain should be the result of healthy competition and free and fair trade, not state-directed investments aimed at distorting global markets,” Pritzker said.
“In addition, no government should require technology transfer, joint venture, or localization as a quid pro quo for market access,” she said.
Additional reporting by AFP
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure