Under the Chips and Science Act, which was passed in August, the U.S. aims to challenge China’s dominance in global semiconductor manufacturing capacity by instituting export controls and pushing corporations to develop domestic manufacturing operations.
The government has previously tightened export controls on chip-making equipment. It is illegal to sell 10-nn or smaller chips without a license.
China’s access to its top contract manufacturer is specifically restricted by this move. Without access to modern US chip-making equipment, Chinese semiconductor businesses will take longer to mass-produce devices, according to industry analysts.
Washington’s push to restructure the global supply chain to limit China’s influence, while poses challenges for China, opens collaborative opportunities for other countries. Efforts to improve and enhance substantial capacity in chip design and manufacturing have led to the launch of the Indo-Pacific Economic Framework (IPEF).
The (IPEF), hosted by US Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai, took place on September 8 and 9 in Los Angeles, with 13 countries in attendance, including Indonesia, Malaysia, the Philippines, Singapore, Vietnam, Thailand, Brunei, Japan, Australia, India, Korea, New Zealand, and Fiji.
The IPEF is set to build a framework geared toward cooperation. This framework is built on four pillars: fair and flexible trade, supply chain, renewable energy, decarbonization and infrastructure, taxation, and anti-corruption measures. Members can choose to join any of the four individual pillars, and from there proceed with the stages of negotiation to come to a detailed agreement.
The US also recently suggested the Chip 4 plan, which includes Taiwan, South Korea, and Japan, to establish a semiconductor US-focused supply chain and exclude mainland China.
Its strategic goal is to break or significantly reduce the current reliance on the giant’s supply chains. However, the unity of these partners will face significant hurdles since China remains a particularly important market and production lead for South Korea and Taiwan.
Global governments struggle with supply chain description. Restructuring is a key US and global economic strategy, particularly for the chip industry. Washington wants to reorient the supply chain to address global disparities and enhance existing structures to fill national structural gaps.