Chinese companies ramp up innovations to deflect assault
The US Senate on Tuesday backed a bill that requires US companies to report their investments in certain Chinese technology sectors, including semiconductors and artificial intelligence (AI), to federal government. The move is seen as the latest US efforts to impede China’s technology progress.
Chinese experts warned that implementing this measure could backfire, as American investors would lose access to the huge Chinese market.
While there may be short-term impact on China due to reduced US investment, Chinese companies are accelerating their technological innovations to fill the void left by US companies, the experts said.
The US Senate overwhelmingly backed legislation on Tuesday that would require US companies to notify federal agencies of their tech investments in China, including in semiconductors and AI, Reuters reported.
The 100-member Senate backed the amendment to the National Defense Authorization Act by 91 to six. The act sets policy for the Department of Defense and is expected to become law later this year, according to the report.
“If these restrictions become law, they would backfire on the US. Without access to the huge Chinese market, US companies’ revenues will plunge, leaving less money for research and development,” Li Yong, a deputy chair of the expert committee of the China Association of International Trade, told the Global Times on Wednesday.
While the situation may have a short-term impact on China’s semiconductor and AI sectors due to lower inflows of foreign capital and fewer tech exchanges, Chinese companies are striving for domestic technology replacements, Li said.
As China is making intensified efforts to achieve self-reliance in semiconductor chips, it’s likely that more domestic capital will ramp up investment in innovations.
Hua Hong Semiconductor, China’s second-largest chip foundry, announced on Monday that it aims to raise up to 21.2 billion yuan ($2.95 billion) in a listing on the Shanghai Stock Exchange, which is expected to be this year’s biggest A-share IPO.
China’s “Big Fund II” has also been investing intensively, as the country aims to overcome the high-end chip ban by the US. Armed with 200 billion yuan in capital, the fund has backed more than 20 projects, the Securities Times reported.
The latest restriction on China’s tech sector came as US Commerce Secretary Gina Raimondo said that she would visit Beijing “this summer,” with the dates yet to be determined.
Chinese experts warned that if the US continues to suppress China with its hegemonic mindset, it could undermine the recent easing of tensions in bilateral relations.
Li said that the attack by the US government on Chinese tech sector will seriously undermine the recent atmosphere of restored communications.
Winding up her visit to Beijing July 9, US Secretary of the Treasury Janet Yellen reiterated that the US is not seeking to “decouple” from China’s economy.
Washington’s pledge is just a “blank check” if it doesn’t take real actions to remove obstacles to China-US relations — for example, additional tariffs imposed on Chinese products and the technology blockades, Li added.
The attempts by the US to cut China off the global semiconductor supply chain have raised widespread concern among affected companies.
On July 20, Taiwan Semiconductor Manufacturing Co said that it will delay production at a facility in the US state of Arizona from late 2024 until 2025, due to the shortage of skilled workers there.
Ma Jihua, a veteran telecom analyst, said that TSMC’s woes highlights the significant challenges of establishing a high-tech factory in the US, including difficulties in recruiting local talent.
“Additionally, the increased operation cost and the current oversupply in the global chip market would mean poor profitability for the chipmakers,” Ma told the Global Times.
A report from the Semiconductor Industry Association revealed that, by 2030, there will be a 58 percent vacancy rate in chip manufacturing positions in the US, along with a shortage of 1.4 million computer scientists, engineers, and technicians in the country.
(Global Times)
