The United States Department of Commerce announced on Thursday that it would begin a survey into the country's defense industrial base and semiconductor supply chain in order to deal with national security issues raised by chips that are sourced from China.
As the department provides almost $40 billion of subsidies for the manufacturing of semiconductor chips, the survey attempts to find out how American businesses are acquiring so-called legacy chips, or semiconductors of the current generation and mature node.
The survey, according to the department, will start in January and try to cut down on the national security risks caused by China. It will concentrate on the use and source of legacy chips made in China that are used in the supply chain of crucial US industries.
The department issued a report on Thursday, saying that China has subsidized the Chinese semiconductor sector with approximately $150 billion over the past ten years, creating an unfair playing field for competitors from the US and other foreign countries.
According to Commerce Secretary Gina Raimondo, over the past few years, there have been indications of potentially alarming practices by China to increase their companies' production of legacy chips and hinder the ability of American businesses to compete.
China's embassy in Washington stated on Thursday that the United States has been misinterpreting national security, misusing export control laws, treating foreign businesses unfairly and discriminatorily, and politicizing and weaponizing science and technology issues.
Raimondo noted last week that her department anticipates awarding about a dozen grants for semiconductor chips over the course of the next year, including billions of dollars in announcements that have the potential to fundamentally alter the direction of US chip production. On December 11, her department presented the program's first award.
According to the Commerce Department, the survey will also support the creation of fair competition for the manufacturing of legacy chips. Raimondo added that it is an issue of national security to address non-market actions of foreign governments that pose a threat to the US legacy chip supply chain.
Around half of the world's semiconductor revenue comes from companies with headquarters in the United States, but the department noted that these businesses face fierce competition from overseas subsidies.
According to its report, the expense of producing semiconductors in the US may be between 30% and 45% higher than in other countries. It also recommended long-term financing for the development of domestic fabrication facilities.
It also stated that permanent measures, like the investment tax credit, which is set to expire in 2027, should be implemented in the United States to encourage stable development and modernization of semiconductor production facilities.