China Claims US CHIPS And Science Act Will Disrupt International Trade, Distort Global Semiconductor Supply Chains

The US CHIPS and Science Act responds to warnings of supply disruptions if China attacks Taiwan, which produces up to 90 percent of high-end chips.

By Associated Press | Updated: 11 August 2022 02:35 IST

China Claims US CHIPS And Science Act Will Disrupt International Trade, Distort Global Semiconductor Supply Chains

Photo Credit: Unsplash

Fears of disruption in semiconductor supplies have been heightened by Chinese threats to attack Taiwan

Highlights

US President Joe Biden signed the CHIPS and Science Act this week
It promises $52 billion (roughly Rs. 4,11,300 crore) in aid to chipmakers
China has criticised the measure, calling it a threat to trade

China on Wednesday criticized a US law to encourage processor chip production in the United States and reduce reliance on Asian suppliers as a threat to trade and an attack on Chinese business. The law signed this week by President Joe Biden promises $52 billion (roughly Rs. 4,11,300 crore) in grants and other aid to investors in US chip factories. It responds in part to warnings that supplies might be disrupted if China attacks Taiwan, which produces up to 90 percent of high-end chips. China's ruling Communist Party claims the self-ruled island as part of its territory.

The measure will “disrupt international trade and distort global semiconductor supply chains,” said a Foreign Ministry spokesperson, Wang Wenbin. “China firmly opposes that.”

Parts of the law “restrict companies' normal investment and economic and trade activities in China,” Wang said, without giving details.

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Disruption in chip supplies following the coronavirus pandemic hampered production of goods from smartphones to autos and highlighted the world's reliance on Taiwanese chips and Chinese factories that assemble most electronic devices.

Fears of disruption have been heightened by Chinese threats to attack Taiwan, which split with the mainland in 1949 after a civil war.

Beijing launched military drills around the island last week in retaliation for a visit by Speaker Nancy Pelosi of the US House of Representatives. China believes visits by American officials to Taiwan might encourage its leaders to make its de facto independence permanent, a step the mainland says would lead to war.

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The “CHIPS and Science Act” calls for research spending that would total about $200 billion (roughly Rs. 15,81,900 crore) over 10 years, according to the Congressional Budget Office.

The Communist Party has spent tens of billions of dollars developing China's own chip production industry. Its factories make low-end chips for autos and other products but cannot supply high-end smartphones and other devices.

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