U.S. Surprised by China’s Counterattack on ‘Semiconductor digging’.. Says Congress, “Budget More”

U.S. Commerce Secretary: “We Can’t Let China Have Advanced Semiconductors”
IRA Backlash: National Security More Important than Short-Term Sales
China Intensifies Self-Sufficiency Efforts, Centered on Huawei
Changxin Produces China’s First LPDDR5 DRAM

Despite U.S.’s stringent export sanctions against China, the country’s ‘semiconductor push’ is accelerating. The Biden administration is showing signs of tension, requesting more budget from Congress in response to China’s countermeasures.

According to Bloomberg on December 2 (local time), U.S. Commerce Secretary Gina Raimondo stated at the Reagan National Defense Forum in Simi Valley, California, “We cannot allow China to have advanced semiconductors,” and “The Department of Commerce’s Bureau of Industry and Security needs to receive more funding from Congress.”

Secretary Raimondo emphasized, “Our budget is $200 million (about 259.8 billion KRW, ~$218 million). It’s equivalent to the cost of a few fighter jets. If we’re serious about (countering China’s semiconductor development), we need to provide as much funding as necessary.”

She also criticized domestic companies suffering losses due to the Inflation Reduction Act (IRA). She acknowledged that “there are CEOs of semiconductor companies who are frustrated and losing sales,” but explained that “protecting national security is more important than short-term sales.”

Secretary Raimondo’s remarks came shortly after news that Huawei Technologies has emerged as China’s most powerful weapon in the U.S.-China semiconductor war. Bloomberg previously reported, citing sources, that the Chinese government has chosen Huawei as the vanguard for self-sufficiency in advanced semiconductors.

Indeed, Huawei launched a smartphone equipped with a self-developed 7-nanometer (nm, one billionth of a meter) chip in September, prompting criticism in the U.S. that there may be loopholes in the export regulations against China. Kendra Schaefer, a partner at consulting firm Trivium China, said, “Due to U.S. export controls, the Chinese government and industry have united in unprecedented ways. Now, Huawei is at the center of that.”

Changxin Memory Technologies (CXMT), a Chinese DRAM semiconductor company, also announced last week that it had produced the country’s first ‘LPDDR5 (Low Power Double Data Rate 5)’ DRAM. This mobile low-power semiconductor memory chip, first introduced to the world by Samsung Electronics in 2018, has become a milestone demonstrating that China’s semiconductor push is accelerating.

The South China Morning Post (SCMP) assessed that “by developing the next-generation high-end mobile memory chip, it has made significant progress in closing the gap with Korean and U.S. competitors,” and “as the U.S. strengthens semiconductor sanctions, China will be able to reduce its dependence on imported parts used in mobile phones and laptops.”

Biren Technology, a Chinese AI chip startup that has challenged Nvidia, has reportedly raised 2 billion yuan (about $307 million) from investors linked to the Guangdong provincial government. Despite being targeted for sanctions after being added to the U.S. blacklist last October, Biren has emerged as an alternative to meet demand as Chinese companies like Baidu struggle to procure semiconductors due to U.S. export controls.