McCaul: Security Trumps Chips Profits

As semiconductor industry officials were on Capitol Hill  urging lawmakers against imposing more export controls on the sale of high-tech chips to China, House Foreign Affairs Committee Chairman Michael McCaul (R-Texas) called on manufacturers to put US national security first.

In a statement, Rep. McCaul said he supports the Administrations restrictions on exports to China and believes controls need to be further updated to address artificial intelligence technology.

“The White House must put national security ahead of commercial interests,” he said.

The Semiconductor Industry Association issued a statement calling on the Administration and Congress to avoid tougher export controls on chips sales to China – the world’s largest commercial market for commodity semiconductors.

“Repeated steps, however, to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the U.S. semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China,” the industry group said.

Rep. McCaul separately warned that the United States must not be too reliant on semiconductors from Taiwan because of the potential that Beijing could cut off that supply chain by blockading the island. He spoke at a program sponsored by the Washington Post.

Dependence on Taiwan

Separately, a new report released yesterday concludes that US dependence on Taiwan for critical semiconductor components and products presents strategic and economic risks.

The report, from the Asia Society Center on U.S.-China Relations and the Hoover Institution, identifies US dependence on Taiwan for semiconductors as “a considerable strategic and economic risk,” and states that “mitigating this risk must be an urgent priority for U.S. policy.”

Taiwan produces most of the world's semiconductors, which run everything from mobile phones to advanced weapons system.

The United States must increase its domestic capacity to manufacture semiconductors, according to the report. “It is not enough to simply constrain China. It is not even enough to innovate in design. The United States must run faster, harder, and with longer-term vision.”

The report also recommends that the United States:

• invest in education on semiconductors within the United States, starting in K-12;
• increase research and development funding in both basic and applied research;
• set immigration rules that welcome and retain top scientists and engineers in this field

and

• use a market-oriented, government-led industrial policy to strengthen the semiconductor sector within the United States.