Make chips, not trade wars, says Semiconductor Industry Association

Industry body warns against political rhetoric or US subsidy efforts will be diminished

The US Semiconductor Industry Association (SIA) has stepped into the fray to lower tensions between Washington and Beijing over chip exports, as well as calling for further restrictions to be put on ice.

Relations between the two superpowers have become increasingly strained since the US launched a campaign to block shipments to China of advanced semiconductors to power AI, as well as choking sales of anything that might be used to develop and manufacture AI. China has since responded with its own sanctions, raising the risk of an all-out trade war.

Now SIA, the trade body of the US semiconductor industry, has issued a statement urging both governments to wind back the political rhetoric and negotiate a way forward without further escalation.

"We call on both governments to ease tensions and seek solutions through dialogue, not further escalation," the SIA statement reads. "And we urge the administration to refrain from further restrictions until it engages more extensively with industry and experts to assess the impact of current and potential restrictions to determine whether they are narrow and clearly defined, consistently applied, and fully coordinated with allies."

SIA also points to the CHIPS and Science Act, which the Biden administration introduced in order to stimulate the US semiconductor industry, and claimed trade restrictions are potentially eroding these efforts.

"Recognizing that strong economic and national security require a strong US semiconductor industry, leaders in Washington took bold and historic action last year to enact the CHIPS and Science Act to strengthen our industry’s global competitiveness and de-risk supply chains," the trade group states.

"Allowing the industry to have continued access to the China market, the world's largest commercial market for commodity semiconductors, is important to avoid undermining the positive impact of this effort."

Moreover, the repeated imposition of restrictions that the SIA describes as overly broad, ambiguous, and at times unilateral, risks diminishing the US semiconductor industry's competitiveness, the trade group claims. These have the effect of disrupting supply chains, causing significant market uncertainty, and prompting retaliation by China.

The statement comes after chip industry executives traveled to Washington to meet with government officials on Monday to discuss the China situation, as The Register reported this week. Intel, Qualcomm and Nvidia were among the companies represented.

US State Department spokesperson Matthew Miller told reporters that Secretary of State Antony Blinken used the meeting to share his perspective on the semiconductor industry and on supply chain issues following his recent visit to China, as well as hear directly from the chip companies about their views on supply chain issues.

The US government is understood to be considering further restrictions on the export to China of advanced chips used for AI processing, which could impact the sales of GPUs from Nvidia and AMD as well as Intel's Gaudi2 AI chip, which were believed to be outside the scope of existing restrictions.

For its part, China has ruled that products from US memory maker Micron should be considered a threat to national security, and that operators of critical information infrastructure should not purchase anything containing these. It has also imposed export restrictions on gallium and germanium, two elements widely used in electronic components.

Gartner VP analyst Alan Priestley told us the SIA view was correct to a certain degree, in that semiconductor supply chains are both complex and global, and so restrictions would inevitably have a disruptive impact.

"Semi industry supply chains are massively complex, not just manufacturing of chips but also the integration of chips into finished products. Both rely on products from a broad range of suppliers and no one country currently has the ability to be fully self-sufficient," he said.

"Even the various Chips Acts (US & EU, etc) are not sufficient to deliver self-sufficiency, so applying restrictions to products/components from a given region has the potential to impact local production capabilities." ®

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