Published in PC Hardware

US asks China to play nice in chip market

by on03 November 2016

Or we will take our ball back

The US government is asking the Chinese to “play nice” in the chip market after fears that the nation might be getting close to technology spurt which will eclipse the “Land of the Fee”.

The US claims that China is rigging the semiconductor market in its favour by indulging in unfair trade practices. This is clearly the US’s role and there is an issue of international demarcation here.

Penny Pritzker, US secretary of commerce, said during a Wednesday event organized by the Centre for Strategic and International Studies, that “unprecedented state-driven interference can distort the market and undermine the innovation ecosystem".

It should know, the US government provides sweeteners to huge numbers of technology companies, and then there is the small matter of allowing companies like Apple hide money off-shore so it hardly has to pay tax.

However, what the US do quietly, the Chinese are upfront about. It is actively investing in companies to build a chip industry from scratch. This could result in Chinese companies becoming less reliant on US technology.

Pritzker said the Chinese government is using its own resources to artificially reduce chip prices, which is hurting global competition. Ironically by providing competition for the US, the Chinese are damaging competition.

She called on China to play fair and in accordance with "global trading rules," with healthy competition and free and fair trade, not through state investments aimed at distorting global markets.

In 2014, China announced it would spend US $150 billion to expand the share of Chinese-made integrated circuits in its domestic market from 9 percent to 70 percent by 2025.

A Chinese homegrown chip is being used in the world's fastest computer, and the country is also funding the development of low-cost semiconductors. The Chinese investment has hurt US companies, which have had to cut prices to be competitive, the US government says. US companies have also had to cut investments in research and development.

The US in the past has blocked the exports of chips for Chinese supercomputers. The country has also security concerns about Chinese products. So this makes it ironic that the US government is complaining  about the number of roadblocks China has established for US companies to compete there.

Last modified on 03 November 2016
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