NYT: US chipmakers need China

Chipmakers are finding it increasingly hard to operate in China but say doing business in the country is still key to their survival, writes Ana Swanson of The New York Times, who covers international trade and tracks the US-China relationship.

In May, Micron Technology products failed to pass a cybersecurity review in China, leaving the company losing an eighth of its global revenue, according to the NYT.

Swanson noted that global semiconductor companies are finding themselves in an extremely tricky position as they try to straddle a growing rift between the United States and China. The semiconductor industry has become ground zero for the technology rivalry between Washington and Beijing, with new restrictions and punitive measures imposed by both sides.

Overall, China accounts for roughly a third of global semiconductor sales. But for some chipmakers, the country accounts for 60 or 70 percent of their revenue. Even when chips are manufactured in the United States, they are often sent to China for assembly and testing, said the NYT.

"We can't just flip a switch and say all of sudden you have to take everything out of China," said Emily S. Weinstein, a research fellow at Georgetown's Center for Security and Emerging Technology, according to the paper.
Those tensions were reflected during Treasury Secretary Janet L. Yellen's recent visit to Beijing, where she tried to walk a fine line by faulting some of China's practices while insisting the United States was not looking to sever ties with the country, noted the NYT.

The NYT stressed that amid tighter regulations and new incentive programs from the United States and Europe, Swanson argued, global chip companies are increasingly looking outside China as they choose the locations for their next major investments. But these facilities will likely take years to construct, meaning any changes to the global semiconductor market will unfold gradually.

John Neuffer, the president of the Semiconductor Industry Association, which represents the chip industry, said in a statement that the ongoing escalation of controls posed a significant risk to the global competitiveness of the US industry, pointed the NYT.

"China is the world's largest market for semiconductors, and our companies simply need to do business there to continue to grow, innovate and stay ahead of global competitors," he said. "We urge solutions that protect national security, avoid inadvertent and lasting damage to the chip industry, and avert future escalations", according to the NYT.