US Gov’t to Limit Chinese Investment in Semiconductor Industry

As the Obama administration is said to adopt a report that put restrictions on Chinese investment in the U.S. semiconductor sector by the end of this month, the domestic semiconductor industry is paying close attention to.

According to industry sources and foreign news reports on January 3, China is expanding its investment in the U.S. semiconductor industry and President Barack Obama will announce measures to limit Chinese investment soon before he leaves office.

On the same day, Wall Street Journal said that the Obama administration is finalizing a study that could lead to restrictions on Chinese investment in the U.S. semiconductor industry, following concerns that it can adversely affect the national economy and security. The report is being prepared by President Barack Obama’s chief science adviser and due to be published before he leaves office this month. Considering the fact that president-elect Trump will officially take office on the 20th, the report will be released before that. The report will include recommendations aimed at bolstering protection of an industry deemed critical to national security. Among its recommendations could be a tougher stance by the Committee on Foreign Investment in the U.S., or CFIUS, a secretive multi-agency panel that reviews foreign acquisitions of U.S. assets for national security threats.

 The CFIUS will provide guidance on how to deal with China’s strategic efforts to dominate the U.S. semiconductor market and put restrictions on new exports and joint investment with Chinese firms.

On the surface, the issue seems to be a “power game” for economic hegemony between the U.S. and China. However, it is also closely related to the South Korean semiconductor industry in the long term.

An official from the semiconductor industry said, “When the U.S. government, which blocked the attempt of China’s Tsinghua Unigroup to buy Micron Technology and SanDisk in the last two years, stipulates restrictions on Chinese investment, it can be favorable for us. However, detailed restriction levels are still unknown. Given the fact that the U.S. has so far maintained the keynote to disapprove China’s attempt to acquire U.S.-based semiconductor companies, the short term effects will be limited even when the report is released.”

The domestic industry also thinks that the latest move of the U.S. government is part of strategies to protect the system semiconductor market on which the country has an edge. The U.S. dominates more than 80 percent of the global system semiconductor market.

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