Washington move can't stall Chinese chip firms' progress

On Aug 9, US President Joe Biden signed into law the controversial CHIPS and Science Act of 2022, which provides huge subsidies and funds for the US chips industry but prevents the subsidy and fund recipients from conducting any major transactions with or investing in the advanced chip-making sector in China or other countries of concern for 10 years.

The United States leads the world in chip design, but it has lost ground to East Asian economies in chip manufacturing with its global share dropping from 37 percent in 1990 to 12 percent today. On the other hand, East Asian economies' share has risen to 73 percent. What further complicates the matter for the US is that it cannot make advanced chips smaller than 10 nanometers.

Worse, by 2030, the share of the US in chip production is expected to further decline to 10 percent, while that of the Chinese mainland is likely to increase to 24 percent, not least because 19 of the 20 fastest-growing chip makers in the world are mainland companies. This fact is hard to swallow for the US and hence the CHIPS and Science Act.