Semiconductor Obsession: More Sanctions Mooted by DOD

Sept. 7, 2020 (EIRNS)—Reports by CNBC and the Wall Street Journal are that the Trump Administration, with sanctions already on Huawei and on U.S. or European firms using American “chip” technology to make chips for Huawei, may next impose export restrictions on one of Huawei’s major manufacturers in China, Semiconductor Manufacturing International Corporation (SMIC). It is China’s largest manufacturer of semiconductors. CNBC quotes a Defense Department spokesperson from Sept. 5: “DOD is currently working with the interagency in assessing available information to determine if SMIC’s actions warrant adding them to the Department of Commerce’s Entity List. Such an action would ensure that all exports to SMIC would undergo a more comprehensive review.” Imposing export controls on SMIC would affect U.S. companies that sell chip-making technology to China manufacturers.

The obsession with semiconductors as the essence of technological power is shared by think-tank experts on “industrial policy” and how the United States should have a robust one. At a CSIS forum on such “industrial policy” Sept. 3, Council on Competitiveness head Deborah Wince-Smith said that “everything depends on the microelectronic space,” a new “surge” in technical advance. She admitted at the same time, “We’re in a very low productivity era” in industry generally—the era characterized by thorough concentration on communications and the microelectronic space! At the same forum Robert Atkinson of the Information Technology and Innovation Foundation said, “We’re producing 13% less real value added in manufacturing than in 2007. Correct for overestimation [i.e., overvaluation] in software, it’s 20%. Don’t be fooled by what the U.S. looked like 50 years ago.” This is also the plea of Senators Tom Cotton (R-AR) and Marco Rubio (R-FL), who have legislation for industrial subsidies focused on the chip-making industry.

Of course, “50 years ago,” when America established its lead in this area, its industrial policy was focused on space exploration and nuclear power technologies and researching fusion plasma and laser technologies, not just on telecommunications. The current semiconductor focus has a strong element of artificial intelligence as key to warfighting, military weapons, and systems, in intense competition with China. It may explain why advocates of a new U.S. “industrial policy,” in both political parties, are indifferent to NASA’s Artemis program, to the current dismal level of support to fusion power development, to magnetic levitation rail, etc.