{"id":11269,"date":"2022-11-21T07:30:28","date_gmt":"2022-11-21T07:30:28","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=11269"},"modified":"2025-04-23T09:36:10","modified_gmt":"2025-04-23T09:36:10","slug":"chinas-chips-are-down-introducing-the-us-chips-and-science-act-2022","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/chinas-chips-are-down-introducing-the-us-chips-and-science-act-2022\/","title":{"rendered":"The US 2022 CHIPS and Science Act, explained"},"content":{"rendered":"

Both China and the US want to see their countries become world leaders in the chip industry, but now t<\/span>he Biden administration is upping the ante in US-China chip-related trade tensions, with measures to prevent American citizens working on Chinese chip design and manufacturing, writes Joe Cash<\/strong><\/span><\/h2>\n

On 24 October, a notice went around Chinese chip maker Yangtze Memory Technologies Co Ltd (YMTC): the company had terminated the contracts of all US citizens and green card holders. Just like that, a number of senior employees in core research and development positions were forced out of the company as YMTC rushed to ensure compliance with the US CHIPS and Science Act. As Foreign Policy<\/em> remarked: \u201cafter four years of watching Donald Trump inflict flesh wounds on China with his ineffectual trade war, US President Joe Biden appears to have found the jugular.\u201d \u00a0<\/span><\/span><\/p>\n

The CHIPS and Science Act (CHIPs stands for \u2018Creating Helpful Incentives to Produce Semiconductors\u2019)\u00a0 is a new US export control, effectively undermining China\u2019s ability to import, manufacture and export the semiconductors that run the world. The legislation not only restricts foreign semiconductor manufacturers from selling specific chips to China or providing Chinese firms with the technologies required to manufacture them, but also encourages them to invest in facilities in the US through the issue of subsidies. The Act will unlock some $280 billion worth of financing provided the recipient does not build any similar facilities in China. It is a major piece of legislation that marks the most significant shift in US policy toward shipping technology to China since the 1990s, given that it suggests that President Biden now wants to contain China\u2019s advances rather than just level the playing field.\u00a0<\/span><\/span><\/p>\n

It is a policy that harks back to the tough regulations implemented at the height of the Cold War. And while \u201cChina isn\u2019t going to give up on chipmaking\u2026 this will set [them] back years,\u201d says Jim Lewis, a technology and cybersecurity expert at the Centre for Strategic and International Studies (CSIS).<\/span><\/p>\n

\"\"<\/a><\/p>\n

Background\u00a0<\/span><\/span><\/h4>\n

In 1947, researchers at Bell Labs, a subsidiary of the telecommunications giant AT&T, invented the transistor, a switch that controls electric current and is a building block of modern electronics. Within the decade, researchers were placing several transistors on a slab of silicon to make an \u201cintegrated circuit\u201d or chip. Today, chips are used in everything from mobiles to missiles and have become fiendishly complex.\u00a0<\/span><\/span><\/p>\n

Prior to the Covid-induced supply chain<\/a> bottlenecks brought about by port closures in various countries \u2013 including China \u2013 and a spike in shipping costs, the fact that the Taiwanese Semiconductor Manufacturing Company (TSMC) and Samsung manufacture almost all of the global supply of the most advanced chips did not seem to bother American policymakers all that much. Trump-era export controls prevented either company from manufacturing chips for firms on the government’s trade blacklist, plus it seemed inconceivable that Beijing would use military means to level the playing field with America, South Korea and Taiwan.\u00a0<\/span><\/span><\/p>\n

Now, however, all the labs and \u2018fabs\u2019 \u2013 short for fabrication (read: manufacturing) facilities \u2013 seem far more strategically vulnerable, leading the Biden administration to try and entice some of that capability back to the US.<\/span><\/p>\n