U.S. Commerce Secretary calls chip sanctions against China “a fool’s errand”

As the United States seeks to tighten sanctions on China’s chip manufacturing capabilities, Commerce Secretary Gina Raimondo said the United States should make better use of its funds. “It would be foolish to try to stop China,” Secretary Raimondo said. She also said that the Biden administration’s Chip and Science Act is more important than export controls. By imposing bans and sanctions, the United States is trying to prevent advanced chips, known as 5G chips, from falling into the hands of the Chinese military.

U.S. Commerce Secretary says ban on China’s semiconductor industry is a waste of time

Thanks to the Chip and Science Act, the United States spent more on chip infrastructure last year than in the previous 28 years combined. Regardless, the Biden administration continues its efforts to prevent Chinese companies from buying wafers from the United States and semiconductor manufacturing equipment from the Netherlands. The latter is home to Dutch company ASML, the only company in the world that produces extreme ultraviolet lithography (EUV) machines.

EUV machines are used to mark circuit patterns on silicon wafers using lines thinner than a human hair. Without access to EUV machines, China’s largest foundry Semiconductor Manufacturing International Corporation (SMIC) has to rely on its older deep ultraviolet lithography (DUV) machines to produce 7-nanometer wafers.

Raimondo has been working to transform the Commerce Department into an agency leading the expansion of the U.S. chip industry. As a result, the U.S. Commerce Secretary concluded that while it was important to keep sensitive technology in Chinese hands, sanctions and export controls were little more than “speed bumps” that barely prevented China from achieving its ultimate goals.

SMIC and Huawei are collaborating to develop alternatives to EUV lithography machines

Raimondo will no longer serve as Commerce secretary in a month, and the incoming Trump administration is expected to change the department’s policies. While Trump said “that chip deal was so bad,” he may seek to replace U.S. subsidies used to expand U.S. chip production with “tariffs so high that they would build their own chip companies for nothing.” .

The problem with threatening China with tariffs is that tariffs are an import tax, and only American businesses and American consumers pay tariffs on imports from China. China has no money coming. The only damage that could be caused is if the tariffs severely damage the U.S. economy and cause business between U.S. and Chinese companies to collapse, causing Chinese exporters to lose U.S. business. But in this case, the U.S. economy will suffer. .

SMIC is currently the world’s third-largest foundry after TSMC and Samsung. Its wafer production is limited to the production of advanced wafers not exceeding 7 nanometers. As we pointed out before, this is because the United States and the Netherlands are blocking the sale of EUV lithography equipment to China. But that hasn’t stopped China from trying to develop alternative technologies to compete with faster, more energy-efficient silicon-based smartphones.