Deploy 'choke points' to prevent Chinese dominance in semiconductors: US panel

The commission also calls for a 40 per cent investment tax credit for semiconductor tools.
The commission also calls for a 40 per cent investment tax credit for semiconductor tools.PHOTO: REUTERS

WASHINGTON (REUTERS) - A US national security commission has recommended that Congress tighten up "choke points" on chipmaking technology to prevent China from overtaking the United States in semiconductors in the coming years.

The National Security Commission on Artificial Intelligence, led by former Google chairman Eric Schmidt, recommended clamping down on China's ability to procure the manufacturing equipment needed to make advanced computing chips. Such chips are used in surveillance technologies such as facial recognition.

"China is making an aggressive push to promote authoritarianism around the world," a Commission official told Reuters. "It boils down to semiconductors."

Much chipmaking equipment comes from US firms such as Applied Materials and Lam Research which are already subject to American export controls. But key gear also comes from firms such as Nikon and Canon in Japan and ASML Holding in the Netherlands.

The report recommends that the US coordinate with those countries to create a policy of presumptive denial in each country for export licences of advanced chipmaking tools to China.

The report also recommends formalising into US policy a longstanding regulatory practice of limiting China's semiconductor industry to two generations behind the US.

In addition to steps to protect US and allied chipmaking technology, the report also recommends measures to promote semiconductor manufacturing in America after decades industry migration to Taiwan and Korea.

The US$35 billion (S$47 billion) in proposals for grants and funding for chip plants and research overlaps with US$37 billion in chip industry measures that President Joe Biden pledged to support last week.

The commission also calls for a 40 per cent investment tax credit for semiconductor tools, which it says would spur chip factory construction in the US as well as benefit American toolmakers.

"Our No. 1 'protect' strategy is to run faster" than China's chip industry, the Commission official said.