US Chipmakers Hold Discussions With Biden Administration Over China Policy: Report

The semiconductor industry is eager to safeguard its profits in China.

While not every official was expected to meet with every company, the discussions encompassed a range of crucial topics. ( Image Source :Getty )

Executives from prominent US chip companies held discussions with top officials from the Joe Biden administration on Monday to address China policy, according to sources and the State Department, reported Reuters. Secretary of State Antony Blinken engaged in conversations with chief executives from chip companies to gain insights into the industry and supply chains, following his recent visit to China. Additionally, Commerce Secretary Gina Raimondo, National Economic Council Director Lael Brainard, and National Security Council Director Jake Sullivan met with representatives from Intel, Qualcomm, and Nvidia, as revealed by a source familiar with the meetings.

The semiconductor industry is eager to safeguard its profits in China, especially as the Biden administration contemplates imposing additional restrictions on chip exports to the country. In 2020, China accounted for $180 billion in semiconductor purchases, representing over one-third of the global total of $555.9 billion and making it the largest single market, according to the Semiconductor Industry Association (SIA).

During the discussions, Blinken aimed to share his perspective on the industry and supply chain issues, drawing from his recent trip to China. The State Department spokesperson, Matthew Miller, emphasised the importance of hearing directly from the companies regarding their views on supply chain matters and doing business in China.

The conversations with government officials also encompassed accelerating the distribution of funds allocated to semiconductor firms through the CHIPS Act and ensuring that US policies do not exclude chip companies from the lucrative Chinese market, according to a second source familiar with the matter.

Commerce Secretary Raimondo is overseeing the CHIPS Act, a semiconductor manufacturing subsidy program worth $39 billion, which was approved by Congress last year. The legislation also introduced a 25% investment tax credit, estimated at $24 billion, for the construction of chip plants.

The US government is additionally focused on China's access to advanced artificial intelligence chips. The source indicated that Washington is on the verge of tightening regulations concerning the computing speed of such chips, although a specific threshold has not been determined.

Earlier on Monday, the Semiconductor Industry Association (SIA), based in the United States, called on the Biden administration to refrain from imposing further restrictions on chip sales to China. The SIA urged the administration to enable the industry to maintain access to the Chinese market, which is the largest global market for commodity semiconductors.

While not every official was expected to meet with every company, the discussions encompassed a range of crucial topics. The meetings occurred amid China's recent move to limit the export of raw materials like gallium and germanium, which are essential for chip production. Blinken addressed this matter during his conversations with the CEOs.

Notably, Nvidia, Qualcomm, and Intel heavily rely on sales in China. Qualcomm is the only company with a license from US regulators to sell mobile phone chips to Huawei Technologies Co Ltd. Nvidia has developed an AI chip tailored for the Chinese market, which has gained traction among major Chinese firms. Intel CEO Pat Gelsinger recently travelled to China to announce the company's own AI chip offering for the Chinese market.