US reportedly butts in to stall chip supply

The US government's reported move to interfere with companies' plans to boost chip output in China is another instance of Washington using political force to disturb normal business decisions. Such moves will further disrupt global supply chains, which are already struggling with a protracted semiconductor supply crunch, experts said.

The comments came after Reuters on Thursday quoted anonymous sources as saying that South Korean chipmaker SK Hynix's plans to upgrade a mass production facility in Wuxi, Jiangsu province, are in jeopardy, because United States officials do not want advanced equipment used in the process to enter China.

SK Hynix said in a reply to Global Times on Friday that it will take a long time before it becomes necessary to reinvest in its Wuxi facility, but it will follow market demand and international regulations to operate facilities.

Last week, Bloomberg quoted sources as saying that the White House "strongly discouraged" the US chipmaking heavyweight Intel Corp from ramping up chip production in China.

Bai Ming, deputy director of the international market research department at the Chinese Academy of International Trade and Economic Cooperation, said though the reports are yet to be confirmed, such a move will deepen anxiety in the global semiconductor sector, as the world grapples with a chip supply shortage for almost a year now.

"The chip shortage is holding back the recovery of many industries across the world. The US market itself has suffered a lot," Bai said. "In such a backdrop, the US government is once again using political force to scuttle companies' plans to boost chip outputs. This is ridiculous and unbelievable."

According to him, the US government is sparing no effort to prevent China from emerging as a semiconductor hub, and such moves will also hurt the interests of many US chip companies, such as Intel, as they have raked in considerable revenue from China, the world's largest chip market.

Companies in other countries will also suffer. The Reuters report named SK Hynix as the next victim of this geopolitical struggle.

This is not the first time the US government is using its hegemony to coerce global semiconductor supply chains to bow to arbitrary requirements way beyond commercial standards, experts said.

Earlier this month, some of the world's largest chipmakers, including Taiwan Semiconductor Manufacturing Co and South Korean chipmaker Samsung, had responded to a contentious US government request to submit chip data.

Industry observers described the request as another instance of the US government arbitrarily using its political force to ask companies to make commercially unreasonable decisions.

In a notice in September, the US Commerce Department enumerated a range of questions for a wide range of parties, such as domestic and foreign chip design firms, material and equipment suppliers and end-users. The questions even touched on client information.

For instance, the information and data the US sought included "for any integrated circuits you produce－whether fabricated at your own facilities or elsewhere－identify the primary integrated circuit type, product type, relevant technology nodes (in nanometers), and actuals or estimates of annual sales for the years 2019, 2020, and 2021 based on anticipated end use."

Though companies, including TSMC, said later they had not disclosed detailed information on clients to the US query, a semiconductor industry insider told China Daily on condition of anonymity that no outsider knows what information was shared with the US government, and he remains deeply worried.

Experts also said that other chip data shared with the US government could include business secrets, and the legality of the US request is questionable.

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said the information the US government demanded, such as orders and prices, is very important to the industry, and using such information a lot of crucial information such as the company's product plans, and expected prices－which are like commercial secrets－can be arrived at.

"The US government's request is politically motivated. It targets not only Chinese companies, but also global companies, which can entail sprawling impacts," Xiang said.

Although the US government authorities said the query was a request, and not a demand, experts called it coercion, saying US government officials had consistently pressured chip companies to reply to their queries. In fact, a Reuters report said US Commerce Secretary Gina Raimondo had threatened companies not responding to the "request" before the Nov 8 deadline, saying "we have other tools in our tool box that require them to give us data. I hope we don't get there. But if we have to, we will".

The US government's move also triggered concern among US industry associations. The Information Technology Industry Council, a Washington DC-based trade association that represents companies from the information and communications technology industry, said on Nov 8 that the "sensitive nature" of the request is sending a worrying signal to global semiconductor industry stakeholders.

The data-collection approach may be less effective than other means, and industry concerns providing the information are heightened "both by a lack of clarity about how this data will be used and who will have access to it, as well as by unclear messaging from the administration on these points," said the Information Technology Industry Council, which goes by ITI for short.