China believes the US Chips Act is discriminatory

China has criticized the Chips and Science law passed in the United States late last month. This law is supposed to subsidize the chip sector, but according to China, the law mainly targets them and leads to unfair effects and a downturn in the sector.

According to Yu Xiekang, the vice president of the China Semiconductor Industry Association, the US Chips Act is primarily intended to lend a helping hand to China’s rivals. He also states that the law clearly discriminates against China. On that last point, the Vice-President gave no further explanation, writes Bloomberg. Yu did make it clear that his country is very much against restrictive measures aimed at certain countries. He speaks of ‘discriminatory provisions’ regarding market competition and that in fact an unfair playing field is being created. That would not be in line with the World Trade Organization’s trade principles.

The bill is intended to strengthen the US chip sector. For this, 52 billion dollars in subsidy will be made available. In addition, more than twenty billion dollars has been made available for tax breaks for the construction of new chip factories. Companies that manufacture chips in the United States, such as GlobalFoundries, Intel, Micron, Samsung and TSMC, can apply for the financing. Also, 170 billion dollars will be made available for scientific research. The law aims to address current vulnerabilities and shortages in the supply chain, but it also includes provisions specifically prohibiting companies that receive funding from expanding their production of advanced chips to China. American companies are also not allowed to just supply parts to Chinese companies.

It is against this background that China’s attempts to set up its own chip sector also play a role. The country is on the rise, but certainly with the more advanced chips, the country still doesn’t seem to score very well. China’s Largest Chip Manufacturer, Semiconductor Manufacturing International Corp would however, recently delivered 7nm chips, pushing its manufacturing technology forward by two generations.