China Still a ‘Huge Market’ for US Chip Companies Despite Risks

An image of a semiconductor wafer at the Taiwan Semiconductor Manufacturing Co. (TSMC) Museum of Innovation in Hsinchu, Taiwan, on Tuesday, April 18, 2023. TSMC is scheduled to release earnings results on April 20. Photographer: I-Hwa Cheng/Bloomberg

(Bloomberg) -- American semiconductor companies want access to the China market despite US government national security concerns and need clear rules from the Biden administration, according to a major industry group.

“It's our biggest market and we're not the only industry that lays claim to that,” said John Neuffer, the president and chief executive officer of the Semiconductor Industry Association. “Our view is that we need to play in that market.”

The administration is preparing to solicit bids from chip companies that want to build semiconductor manufacturing plants in the US under President Joe Biden's Chips and Science Act. As part of that process, rules will be proposed regarding what kinds of investments the companies can make in China.

“It's up to the government to determine what national security priorities are,” Neuffer said during at interview at Bloomberg's Washington Bureau. “That's not our business. Our business is to make sure that the government, when it's taking steps to ensure national security, that it knows what kind of commercial impact it has.”

Neuffer said he is optimistic the administration will be pragmatic in dealing with such guardrails to make sure the chips program is successful and that companies can get the funds. His organization, which was instrumental in helping to pass legislation enacting the incentives, says it wants “clear rules of the road.”

“We just want there to be clear rules of the road so that what the government thinks is a national security concern is very well defined and transparent and also predictable,” said Jimmy Goodrich, the vice president of global policy for the trade group. “We've kind of had over the last two administrations, frankly, a bit of a roller-coaster ride when it comes to national security and trade restrictions.”

“For businesses in the semiconductor industry that are trying to plan for five years out, not knowing what might happen in the next six months creates a lot of uncertainty and challenges,” Goodrich said.

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