In a significant move, the U.S. Department of Commerce has announced the initiation of an industrial base survey slated to commence in January 2024. This survey marks a pivotal step in comprehensively analyzing the capabilities and challenges of the broader U.S. semiconductor supply chain and national defense industrial base. The primary objective is to establish a foundation for continued assessment, specifically focusing on the sourcing of both current-generation and mature-node semiconductors, commonly referred to as legacy chips.
The survey is strategically designed to gain insights into how U.S. companies procure these critical legacy chips, which are integral to supporting key industries such as telecommunications, automotive, and the defense industrial base. Secretary Gina Raimondo emphasizes that addressing non-market actions by foreign governments, particularly those of the People’s Republic of China (PRC), is crucial for national security. The survey aims to proactively identify potential challenges and threats to the U.S. legacy chip supply chain, particularly concerning practices by the PRC to expand their firms’ legacy chip production, making it challenging for U.S. companies to compete.
Raimondo stresses the collaborative approach needed to build a robust supply chain, stating, “Government alone cannot create and sustain a robust supply chain – we need industry at the table.” The survey is expected to empower the Department of Commerce with essential data to inform strategic measures in building strong, diverse, and resilient semiconductor supply chains.
The Bureau of Industry and Security (BIS) within the Department of Commerce will spearhead the survey, focusing on the use and sourcing of PRC-manufactured legacy chips within the supply chains of critical U.S. industries. This initiative aligns with the findings of a Congressionally-mandated report released concurrently, assessing the capabilities of the U.S. microelectronics industrial base to support national defense. The report, prepared in accordance with Section 9904 of the National Defense Authorization Act for Fiscal Year 2021, underscores the need for the United States to promote a level playing field for semiconductor manufacturing.
Companies headquartered in the U.S. represent approximately half of global semiconductor revenue, but they contend with fierce competition bolstered by increasing subsidies from foreign governments. The report recommends supporting domestic fabrication, assembly, test, and package capabilities to ensure a level playing field for semiconductor manufacturing in the United States. Additionally, it emphasizes the importance of continued protection of U.S. technology through export controls and further assessment of potential non-market behavior.
The Bureau of Industry and Security had concluded data collection in May 2023 and collaborated with the CHIPS Program Office to develop the report and recommendations. This initiative underscores the commitment to transparency and monitoring within the international trade landscape, aligning with the objectives of the International Centre for Trade Transparency and Monitoring. As the survey unfolds, it is anticipated to provide valuable insights that will shape future policies and initiatives to fortify the U.S. semiconductor supply chain and mitigate potential risks to national security.