Ways to break China’s legacy chip hold

Back in June, the Federation of American Scientists teamed up with Noahpinion, ChinaTalk, and Chris Miller to hold a crowdsourced policy competition.

We asked for ideas on how to deal with the problem of China potentially controlling the supply of foundational chips (also called “trailing-edge” semiconductors). Here was the post where we made the announcement:

The US has implemented export controls to try to stop China from getting a technological edge in advanced cutting-edge chips. But as I explained in a recent post, export controls have no hope of stopping China from building simpler types of chips — called “legacy chips”, “foundational chips”, or “trailing-edge chips.” These legacy chips are used for a huge number of things in our economy, from cars to smartphones to fighter jets.

And China is gearing up to build these legacy chips in absolutely staggering numbers. Check out this post by Jimmy Goodrich of the University of California Institute on Global Conflict and Cooperation and this post by the Rhodium Group for details. Basically, China is applying the same approach to legacy chips that it has successfully applied to batteries and EVs — massive scale and enormous subsidies. Already,

This basically presents at least three potential dangers to the US:

1. First, China could deprive non-Chinese chipmakers of huge amounts of revenue by outcompeting them in the legacy chip market, making it harder for them to sustain their leading-edge chip businesses. Already investors are pressuring US companies to avoid competing with China by canceling their semiconductor fabs.

• Second, if China controls the legacy chip market, it could cut off our supply of chips in a war.

• Third, Chinese security services might be able to put back