US-China chip war may extend to legacy chips

Beijing is worried by news that the Biden administration is conducting a survey of the extent of use of Chinese chips in critical industries in the United States.

In a phone call on Thursday, Chinese Commerce Minister Wang Wentao told US Commerce Secretary Gina Raimondo that China is seriously concerned by Washington’s latest move to probe American companies’ purchase of mature-node China-manufactured computer chips of 28 nanometers or above, which are known as “legacy chips.”

Wang also complained that the US had restricted third-countries’ lithography exports to China and imposed sanctions on Chinese firms.

Wang’s comments came after the US Commerce Department said on December 21 that its Bureau of Industry and Security (BIS) would launch a new survey in January 2024 to identify how US firms are sourcing current-generation and legacy chips.

Raimondo said at that time that the US had seen signs of potentially concerning Chinese practices that could expand PRC-based firms’ legacy chip production and make it harder for US suppliers to compete.

She said legacy chips are essential to supporting critical US industries, including telecommunications, automobiles and the defense industrial base. She said addressing non-market actions by foreign governments that threaten the US legacy chip supply chain is a matter of national security.

A study released last month by the BIS Office of Technology Valuation said the Chinese government had provided its chipmakers with about US$150 billion in subsidies in the past decade, which is likely to drive below-market pricing for legacy chips and create a non-level global playing field for US and other foreign competitors.

Raimondo told Wang on Thursday that US national security issues are