China Greater China Dominates Global Microchip Exports [Infographic]

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Greater China Dominates Global Microchip Exports [Infographic]
Katharina Buchholz

Jul 27, 2022,12:18pm ED

The so-called Chips+ bill passed the U.S. Senate on Tuesday and has a good chance of becoming law as it moved on to the House. As fears of a confrontation with China are heightening, negotiations that lasted more than a year are finally coming to fruition for the bill which is looking to increase the competitiveness of the U.S. microchip industry, thereby alleviating dependency on Greater China and the shortage of microchips felt globally.

According to Yahoo News, the cost of the bill is still being calculated, but is expected to come in at around $79 billion spent over the next ten years. This includes a key provision of $50 billion that will go directly to U.S. chipmakers for the expansion of facilities as well as for research and development.

This chart shows the countries with the biggest export values of electronic integrated circuits in 2020 (in billion U.S. dollars).

For now, Mainland China, Hong Kong and Taiwan are dominating global microchip production, which allows them to control half of the worldwide export market. As seen in numbers available from the UN Comtrade database, Greater China exports of microchips totaled almost $400 billion in the pandemic year of 2020—the latest for which full data is available. The U.S. exported semiconductors worth around $44 billion the same year, still the seventh-highest in the world.

In 2021, exports out of Greater China were back up to around $522 billion, while those out of the U.S. rose to just below $53 billion.

Rapid, ongoing shift in chip production

As recently as 1990, the U.S. still produced almost 40 percent of semiconductors globally, with Europe responsible for roughly another 40 percent. But the growth of cheaper production facilities in Asia set in motion a trend that quickly changed where microchips typically come from. Just ten years later, in the year 2000, Europe and the U.S. together contributed only slightly more than 40 percent to global semiconductor manufacturing, with Japan, South Korea and Taiwan taking up almost all the rest of it. By 2010, Mainland China had already carved out a small share of the market. That subsequently grew to around 15 percent by 2020 and is expected to expand to as much as a quarter of global production by 2030, taking away market shares from competitors in the U.S., Europe and Asia all at the same time.

As disruptions to supply chains caused microchip shortages during the Covid-19 pandemic, several countries started initiatives looking to reverse the above trend and boost production of the critical asset at home. Before the U.S., Japan and the EU had already announced actions to produce more semiconductors domestically. The fast growth of Mainland China’s chip production will be hard to catch up to, however.

Greater China Dominates Global Microchip Exports [Infographic]

As fears of a confrontation with China are heightening, negotiations that lasted more than a year are finally coming to fruition for the Chips+ bill that is looking to increase the competitiveness of the U.S. microchip industry, thereby alleviating dependency on China and the shortage of microchips.

www.forbes.com

 

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US Senate passes bill to boost chip production, counter China's dominance​

The US Senate has approved a bill to bolster the domestic manufacture of semiconductor chips and counter China's share in the global chip production​

Topics
New York Last Updated at July 28, 2022 21:55 IST

The bill, known as the Chips and Science Act, passed in a 64-33 vote on Wednesday.

US Senate passes bill to boost chip production, counter China's dominance

The US Senate has approved a bill to bolster the domestic manufacture of semiconductor chips and counter China's share in the global chip production

www.business-standard.com

 

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As Congress Debated Landmark China Bill, Beijing Surged Ahead​

Experts are still assessing how China apparently leapfrogged ahead in its effort to manufacture a semiconductor that rivals those made in Taiwan, which supplies both China and the West.
July 28, 2022

In the weeks before the House and the Senate ended 13 months of arguments and passed the $280 billion CHIPS and Science Act, China’s main, state-supported chip maker cleared a major technological hurdle that delivered a bit of a shock to the world.

Experts are still assessing how China apparently leapfrogged ahead in its effort to manufacture a semiconductor whose circuits are of such tiny dimensions — about 10,000 times thinner than a human hair — that they rival those made in Taiwan, which supplies both China and the West. The Biden administration has gone to extraordinary lengths to keep the highly specialized equipment to make those chips out of Chinese hands, because progress in chip manufacturing is now scrutinized as a way to define national power — much the same way nuclear tests or precision-guided missiles were during a previous cold war.

China Has Leapfrogged the U.S. in Key Technologies. Can a New Law Help? (Published 2022)

While Congress argued over whether and how to support American chip makers and research in other technologies, China was surging ahead.

www.nytimes.com

 

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Congress's semiconductor legislation won't hurt China, but it will hurt taxpayers​

AUGUST 01, 2022 12:00 AM
BY BRENT GARDNER

Opportunists have never failed to take advantage of a panic, which is why some of the most profitable U.S. companies are looking to capitalize on China's hawkishness to extract massive subsidies from taxpayers. Not wanting to appear weak on China, a bipartisan Senate voted Tuesday to hand $52 billion in subsidies to chip companies, which are enjoying historic revenue , are experiencing record investment in research and development, and are already in the process of building new domestic fabrication plants.

Industrial policy — the use of tariffs, subsidies, or similar measures to benefit a specific industry deemed vital — is alive and well in America. It shouldn’t be. Industrial policy such as subsidizing the semiconductor industry is rarely justified, rarely works as planned, and is always costly to either taxpayers or consumers. Congress need look no further than China.

Notwithstanding billions of dollars in subsidies and support since 2014, “semiconductors represent a rare area in which the Chinese economy is dependent on the rest of the world — rather than the other way around,” according to a 2021 Brookings Institution report . China still has no company that can produce cutting-edge semiconductors and remains a net importer to the tune of $300 billion. Even if China were able to make good on its stated goals, its companies would still “generate less than 15% of the industry’s overall R&D capacity,” according to Brookings. Contrast that to the U.S., where the industry has almost 50% market share by revenue and has reached an all-time high for R&D investment, trailing only pharmaceutical and biotechnology firms in the ratio of R&D to sales. America’s leaders should accept victory, not get into an “arms race” with Beijing on who can spend the most on a failed policy.

Industrial policy creates perverse incentives for companies, and that is certainly the case with CHIPS. In March 2021, the CEO of Intel announced the company would invest billions to create a new manufacturing base in Arizona. At the time, he said, “It does not depend on a penny of government support or state support or any other investments to make it successful.” Fresh from hitting record revenue, the CEO testified before Congress this year that without billions of taxpayers’ money, Intel may abandon its on-shoring strategy. The CEO gave the game away in January when he told Bloomberg, "Let's not waste this crisis.” The semiconductor industry has spent tens of millions of dollars to lobby for the passage of CHIPS as well as other measures to benefit them. They have every right to do so. But too often, industrial policy amounts to little more than corporate welfare.

The federal government’s ability to discern businesses vital to national security is sketchy at best. The Trump administration imposed Section 232 tariffs on both steel and aluminum in cases that “threaten to impair national security,” a broad imperative that eventually led officials to declare that the domestic auto industry qualified for Section 232 tariffs. Can one really sustain the argument that the Toyota Camry or the Volkswagen Jetta represent a threat to national security? Such legal gymnastics are bipartisan. In June, President Joe Biden authorized the use of the Korean War-era Defense Production Act to support the solar panel industry. The solar panel industry? If these industries pass the “vital to national security” test, soon every widget maker in America will be lobbying Washington for the designation as well.
Industrial policy comes at a high cost. According to some estimates, Trump administration tariffs cost consumers $51 billion, and a recently released Cato Institute study found that industrial policy protectionism has cost $620,000 per job saved , again much of that borne by consumers who can ill afford a $52 billion handout to tech giants at a time when inflation has hit a 40-year high.

Industrial policy has been debated in America ever since Alexander Hamilton submitted his Report on the Subject of Manufactures to Congress in 1791. Nearly every democratic country is grappling with this debate, but leaders in many other countries are working to unravel their yearslong wasted investments on industrial subsidization and policy. Japan gave up industrial policy decades ago; European attempts at creating national industrial leaders have largely failed; in India and Latin America, these policies have arguably hampered economic growth. The White House should avoid the same mistakes. Biden could send a clear signal by vetoing the $52 billion taxpayer windfall to the semiconductor industry, but if you believe that he'll do it, I have a semiconductor plant in China to sell you.

Congress's semiconductor legislation won't hurt China, but it will hurt taxpayers

Opportunists have never failed to take advantage of a panic, which is why some of the most profitable U.S. companies are looking to capitalize on China's hawkishness to extract massive subsidies from taxpayers. Not wanting to appear weak on China, a bipartisan Senate voted Tuesday to hand $52…

www.washingtonexaminer.com