The U.S. has been urged to strengthen the protection of its semiconductor industry against threats posed by Chinese policies which seek to dominate the industry, according to a report by a White House advisory panel.
Released on Friday, Jan. 13, by the President's Council of Advisors on Science and Technology, the report said that the "concerted push by China to reshape the market in its favor, using industrial policies backed by over one hundred billion dollars in government-directed funds, threatens the competitiveness of the U.S. industry and the national and global benefits it brings."
"We found that Chinese policies are distorting markets in ways that undermine innovation, subtract from U.S. market share, and put U.S. national security at risk," it added.
An article by Forbes said that as part of its strategy, China has spent about $150 billion in both public and private funds over a 10-year period to make technology investments and acquisitions, including access to its market to attract technology transfer.
The report however, said that the U.S. government has initiated efforts to tackle the problem. President Obama blocked in August the proposed sale of German firm Aixtron SE to Fujian Grand Chip Investment Fund, citing national security issues.
To challenge the Chinese policies, the advisory panel presented steps that the U.S. government can take, which include enhancing transparency around the Chinese policy on technology and investment controls, taking individual transactions in line with Chinese policy and reacting immediately to Chinese policies that violate trade rules and the global market.
According to the panel's report, the industry must be kept vital and competitive through policies that would nurture and attract talent, fund research, and reforms in corporate tax laws and permitting practices.
The report said that the U.S. "will only succeed in mitigating the dangers posed by Chinese industrial policy if it innovates faster. Policy can, in principle, slow the diffusion of technology but it cannot stop the spread. The only way to retain leadership is to outpace the competition."
A semiconductor working group that was launched in October last year, helped produced the report. One of the leaders of the group is John Holdren, director of the White House Office of Science and Technology Policy and co-chair of the President's Council of Advisors on Science and Technology.
The report said that the U.S. government is concerned about the rising Chinese investments in recent years.
"Generally speaking, the level of anxiety within government and Congress about inbound investments has been rising over the past few years, particularly concerns relating to cyberspace, the transfer of personally identifying information or U.S. intellectual property," DJ Rosenthal, associate managing director at Kroll in Washington, D.C., said.
Last year, Chinese investment in the U.S. has tripled, reaching about $46 billion, the Rhodium Group said. About 90 percent of these investments were related to services and advanced manufacturing sectors.
Although many Chinese deals were examined by the Committee on Foreign Investment (CFIUS), some U.S. lawmakers believed the action are not enough.