The United States lifts the veil on its plan to confront China

“Reduce costs, create jobs, strengthen supply chains and confront China.” The title of the press release published on Tuesday, August 9th on the US Presidency website is sufficient for action on the Semiconductor and Science Act signed on the same day in the White House gardens by President Joe Biden.
He was surrounded by several senior industry officials, including Pat Gelsinger, general manager of Intel, the first American chip maker.

This Chips and Science Act, which was launched by the Senate and supported by Democrats and Republicans, is clearly aimed at attacking Chinese sites in the production of components, the strategic nature of which has been exposed due to shortages caused by the Covid-19 epidemic. The Chinese Embassy in Washington also said that it sees in this text – with regret – a ‘Reminds us of the spirit of the Cold War’.

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His signature comes just days after House Speaker Nancy Pelosi’s visit to Taiwan, Wednesday, August 3. By reigniting tensions with Beijing, this visit reminded the United States of the risks for national security and its dependence on components made in China and, more broadly, Southeast Asia.

Several guarantees

According to the Semiconductor Industry Association of America (SIA), the United States accounts for only 12% of global chip production capacity, three times less than it was in 1990. In 2020, according to SIA, still among the thirty-nine new plants built In the world, there were only four on US soil, compared to ten in China, ten in Taiwan, five in South Korea, five in Japan, four in Europe and one in Singapore.

To reverse the balance of power, Washington is ready to put up 52.7 billion dollars (51.6 billion euros) in subsidies, spread over ten years, 39 billion of which will go to production incentives on US soil. Two billion chips will be allocated to the automotive and defense industries alone. Additionally, industrial or equipment investments will result in a 25% tax credit, at an estimated cost of $24 billion.

To ensure the effectiveness of these measures, US lawmakers impose several restrictions. No way it “beneficiaries” of this aid “It’s building some facilities in China and other countries of concern.”, warns the White House. Russia and Iran are part of it, and North Korea determines with them the text of the law. Beneficiaries must also pledge not to increase the production capacity of their Chinese high-performance chip plants for ten years.

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