Why China producing legacy computer chips is EXTREMELY dangerous for the US

Since Joe Biden’s CHIP Act in 2020, the U.S. government has actively protected “advanced chips” (in techno speak, those set at an arbitrary level of 14 nanometers or smaller for export control purposes), but has ignored legacy semiconductors – those that are critical to defense systems, critical infrastructure, automobiles, medical devices, consumer electronics, and other products.

With the U.S. government exclusively targeting China’s advanced chip manufacturing sector, the People’s Republic of China (PRC) – led by SMIC, its national champion working with the Chinese military – is exploiting the U.S. government’s tunnel vision and spending billions to dominate legacy chip manufacturing.

ChinaTech: The national security and economic consequences of a Chinese-dominated legacy chip space would be profound:

  • The U.S. military would potentially be dependent on China for chips essential to various warfighting technologies and critical infrastructure.
  • The world would be re-exposed to supply chain vulnerabilities associated with China-centric chip production.
  • The Chinese Communist Party would have more new conduits for spying on, hacking, and stealing from targets in the West.
  • The CHIPS Act, designed to boost American chipmaking competitiveness and strengthen semiconductor supply chains, would be rendered irrelevant.
  • Other dangerous Chinese tech companies such as Huawei would benefit from a stable source of chips (and American companies may very well not).

During a House Foreign Affairs Committee hearing on February 28, Rep. Aumua Amata Coleman Radewagen asked BIS Under Secretary Alan Estevez, “How many PRC (Chinese) chips are you comfortable having in DoD systems and critical infrastructure?”  Here’s an interview that took place after the hearing with the Congresswoman:

Q1: What would you have liked to hear from BIS Under Secretary Estevez when you asked him “How many PRC chips are you comfortable having in DoD systems and critical infrastructure?”  

“Ideally, zero. If that’s not the case, which it seems it’s not at all, it should be an active plan to move toward, not eventually but soon. We should develop clear goals and aggressive progress markers, including priorities to solve first, without delay. This seems to me to be common sense. Contractors would need to be part of that plan, moving beyond dependence on these chips as soon as it is practical. This is not a problem for years down the road.” This is why I support an expansion of section 5949 in the FY 2023 NDAA to completely bar federal contractors from using Chinese chips in their equipment.”

Q2: Do you believe that increased U.S. dependency on Chinese-made chips is a risk to our national security and economic security? If so, why?

“China is a strategic competitor, known to be ambitious and none too scrupulous. Any kind of international issue or disagreement could cause a stoppage or reduction in the supply that we depend on. That’s an obvious risk. I think studies and experts back that up.”

Q3: You also asked why American-made technologies are being exported to SMIC – China’s leading chipmaker – despite export controls. Does SMIC deserve to be the target of new export controls?

“Yes they should. If there are gaps in our efforts that need to be identified, if the law needs to be clarified, if more steps are needed, then Congress should address it because our constitutional requirement is clear. We must provide for the common defense and secure the blessings of liberty. I have a lot of respect for Chairman McCaul on key issues like this, including when he wrote “the Department of Commerce [should] rewrite SMIC’s Entity List rule to close dangerous loopholes that appear to allow nearly all sales to SMIC to continue without restriction.”

Q4: Beyond BIS, what are some other means to defend America’s capacity for access legacy chips for defense systems and other critical infrastructure?

“We should work to secure a safe and stable supply line of chips. Chips are a national security concern, China has shown that it will use whatever means to monopolize certain industries, and we must not allow that to happen with chips.”