Home Politics The US ‘chip law’ contradicts principles of fair trade, creates chaos in logistics

The US ‘chip law’ contradicts principles of fair trade, creates chaos in logistics

China has lashed out at the U.S. government because of a new law that encourages chip production in the U.S. The chip law would be a ” violation of the principles of fair trade.”

US president Joe Biden signed the new chip law earlier this month, which allocates $ 52 billion to increase computer chip production in the US. According to Biden, This is necessary in order to be less dependent on Asian chip manufacturers and to stay ahead of China.

The industry association for the Chinese chip sector CSIA, which is controlled by Beijing, has expressed harsh criticism of the US chip law during a press conference. According to CSIA director Yu Xiekang, this is primarily intended to help competitors of Chinese companies. “The law contains discriminatory clauses that lead to an unfair playing field, which goes against the fair trade principles of the World Trade Organization,” says Yu.
“Chaos in the chain”

The law states that chip companies will only receive subsidies for the construction of their US factories if they do not further expand their chip production in China. The CSIA also warns that U.S. law could lead to ” chaos in global supply chains.” 744 Chinese manufacturers are affiliated with the CSIA.

The Chinese government itself has also been giving tens of billions of dollars in subsidies for many years to increase chip production in its own country, including large manufacturers such as SMIC and Yangtze. The turnover of the Chinese chip sector increased by 18 percent last year and is expected to increase by 15 percent this year.

China is still a relatively small player in the production of chips, although the country is making progress, for example in the manufacture of memory chips. The US has been pursuing a policy to curb China’s chip ambitions for years, including with all kinds of sanctions.

The US government recently exerted pressure on the Netherlands to ban the Veldhoven chip machine manufacturer ASML from selling certain technology to Chinese companies. ASML is the world’s leading manufacturer of machines used to produce chips.

U.S. chip companies account for nearly half of global chip sales. Of global chip production, only 12 percent takes place in factories in the US, the vast majority is produced in Asia, especially in South Korea and Taiwan. Taiwan’S TSMC is currently the largest chip manufacturer in the world, but the company may face mounting tensions between China and Taiwan.

For the assembly of gadgets, most brands are also very dependent on China, although companies like Apple are moving more and more of those activities to countries like Vietnam and India.

About the author: Rick Culpepper

Rick Culpepper is of those journalists who dig the topic to the very bottom. He is often late with the delivery of the piece, but always does it perfectly. In his spare time, he collects data for one of the most high-profile investigations of corruption in the EU.

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