Zach Mottl is chair of the Coalition for a Prosperous America and president of Atlas Tool Works.
Last fall, the Biden administration banned Chinese companies from buying advanced U.S. semiconductors and chip manufacturing technologies. The reason for the ban was sound — to prevent China from accessing and stealing high-tech components that have both civilian and military applications.
Since semiconductors are an integral part of smartphones, electric vehicles and fighter jets, banning exports of these sensitive technologies remains critical to our nation’s future economic and national security.
Now, some of America’s largest chipmakers are urging the Biden administration not to impose “further restrictions” on China’s access to U.S. semiconductors. Instead, they’re demanding “continued access to the China market” — meaning they believe their profits should supersede what’s best for America.
This is hypocritical. The Semiconductor Industry Association strongly supported the 2022 CHIPS for America Act — legislation that provided more than $52 billion for semiconductor research, development and manufacturing in the United States. The bill also mandated that recipients of federal funds “not build certain facilities in China and other countries.”
The CHIPS for America Act was eventually merged into the CHIPS and Science Act, which came at an important time. Although the U.S. invented the semiconductor, it now produces only about 10% of the worldwide supply of chips — and relies on Asian countries for 75% of global production.
In the face of such a glaring imbalance, Congress passed the Chips Act to encourage private sector investment in a potentially world-leading U.S. semiconductor industry.
Much of the support for the CHIPS Act came in the wake of the COVID-19 pandemic when global supply chains had come to a halt. That left the United States in the lurch, particularly for semiconductors. Without adequate supplies, U.S. companies were unable to manufacture cars, electronics and other equipment.
The CHIPS Act marked a necessary start toward rebuilding America’s chipmaking capacity. It was also intended to “counter China.”
As the White House explained, the legislation would ensure “U.S. leadership in the technology that forms the foundation of everything from automobiles to household appliances to defense systems.”
There are good reasons to deny China access to proprietary U.S. semiconductor technology. Chinese companies already routinely hack the intellectual property of U.S. firms. Beijing’s own “Made in China 2025” agenda aims to build a “world-leading semiconductor industry.”
With Beijing making increased threats over Taiwan and continuing its genocide of Uyghurs and other ethnic minorities, there’s absolutely no reason to allow China further access to America’s high-tech capabilities. To put it bluntly, allowing U.S. companies to sell key technologies to China can only help to advance Beijing’s already disturbing ambitions.
That brings us back to the Semiconductor Industry Association. The group is urging President Biden to “refrain from further restrictions” on semiconductor exports and is concerned about “escalatory retaliation by China.”
Essentially, semiconductor companies are happy to accept billions of taxpayer dollars through the CHIPS Act, but they don’t want to sacrifice any of the profits they might earn from sales in China.
It’s clear that Washington shouldn’t help China develop its advanced industries, especially with taxpayer funds. But it’s also time for America’s corporate executives to understand that the federal government’s primary focus is to protect the economic and national security of our country.
It’s not Washington’s job to protect the investments that companies make in China. But it should be a priority of Congress to ensure that U.S. industrial policies, like the CHIPS Act, can benefit our companies and our workers.
There’s an old saying, “You can’t sit at both ends of the table at the same time.” In other words, you can’t have it both ways.
That’s good advice for some of the semiconductor companies benefiting from billions in federal investment courtesy of American taxpayers. It should make them reconsider whether putting aside U.S. economic and national security to protect their short-term profits in China is really in our nation’s long-term interest.
