When the US Congress passedthe Chips and Science Act back in July,that was largely seen as a bill that supported and subsidised US domestic manufacturing of the advanced chips that are vital to the development of 21st Century industrial and defence technologies. It provided $US52.7 billion ($84.7 billion) in subsidies for domestic chip plants and semiconductor research and development.
A little over a week ago,however,a low-profile US Commerce Department agency,the Bureau of Industry and Security,issued a detailed list of rules,including what are effectively extraterritorial restrictions on exports of advanced chips,chip-making equipment and chip-making components to China where there has been any US input to the process. It was by far the broadest and most potent attempt to stymie development of China’s semiconductor industry.
The rules also seek to prevent China from accessing US-developed intellectual property by prohibiting US citizens,permanent residents and companies from continuing to work in or provide support for its advanced chip manufacturing and development programs.
China has spent more than $US100 billion of a budgeted $US150 billion to fast-track the development of a domestic chip-making industry. It is a critical component of its “Made in China 2025 program,” which set out China’s plans to dominate artificial intelligence,autonomous vehicles,next-gen information technology,telecommunications,advanced robotics and aerospace,among other technology-related sectors by 2049.
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Despite the massive subsidies and national prioritisation,however,China badly lags the US,Taiwan,South Korea,Japan and Europe when it comes to the design of advanced chips,the tools for manufacturing them and the very expensive and sophisticated plants that manufacture them at commercial volumes.
Xi didn’t refer to the latest measures specifically in his address to the congress on Sunday but there was a strong focus on technology and a plan to accelerate innovation in areas important to “technology self-reliance.” A number of major projects that were of “strategic,big-picture and long-term importance” would be launched,he said.