Huawei mea­sures may spark slide in US chip devel­op­ment

The Daily Telegraph - Business - - Business - By James Tit­comb in San Fran­cisco

DON­ALD TRUMP’S crack­down on Huawei us­ing Amer­i­can tech­nol­ogy risks back­fir­ing by mov­ing more re­search and devel­op­ment to China, the semi­con­duc­tor in­dus­try has warned.

The White House has an­nounced plans to cut off Huawei’s ac­cess to high-end mi­crochips by ban­ning com­pa­nies that sup­ply them from us­ing ad­vanced US equip­ment and soft­ware.

The rules, which were an­nounced in May and are due to come into force in Septem­ber, af­fect com­pa­nies such as the gi­ant Tai­wanese man­u­fac­turer TSMC, which sup­plies chips to Huawei us­ing US equip­ment.

They are de­signed to strike at the heart of the Chi­nese com­pany’s sup­ply chain, which still re­lies on US semi­con­duc­tor ex­per­tise.

How­ever, the Semi­con­duc­tor In­dus­try As­so­ci­a­tion (SIA), the trade body that rep­re­sents com­pa­nies in­clud­ing

In­tel, Qual­comm and Nvidia, said the crack­down would en­cour­age devel­op­ment of tech­nol­ogy abroad and mean the US is left be­hind in tech­nolo­gies such as 5G.

In a sub­mis­sion to the US com­merce depart­ment con­sul­ta­tion about the rules, it said: “The new rule has cre­ated a struc­tural in­cen­tive for des­ig­nated en­ti­ties [such as Huawei] to fund the devel­op­ment and pro­duc­tion of new mer­chant items by com­peti­tors of US com­pa­nies.

“This in­come, which is not avail­able to US com­pa­nies, will fur­ther fund the R&D of the for­eign com­pa­nies, which in­creases their abil­ity to out-com­pete the US com­pa­nies in crit­i­cal tech­nolo­gies such as 5G.”

TSMC, the world’s big­gest mi­crochip man­u­fac­turer, has said it will stop sup­ply­ing Huawei with chips as a re­sult of the or­der.

China is in­vest­ing bil­lions in de­vel­op­ing sov­er­eign ca­pa­bil­ity in semi­con­duc­tors, and has made self-suf­fi­ciency a na­tional pri­or­ity.

In May, US com­merce sec­re­tary Wil­bur Ross said this “in­di­geni­sa­tion ef­fort” was still re­liant on US tech­nol­ogy.

The SIA said the new US rules ap­peared vague and cre­ated sig­nif­i­cant un­cer­tainty for US busi­nesses at­tempt­ing to com­ply with it.

Wil­bur Ross, the US sec­re­tary of com­merce, has proved cen­tral in Amer­ica’s ap­proach to Chi­nese tech

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