Asia Pacific

U.S. panel recommends export 'choke points' to prevent Chinese dominance in semiconductors

3 minute read

U.S. President Joe Biden delivers holds a semiconductor chip as he speaks prior to signing an executive order, aimed at addressing a global semiconductor chip shortage, in the State Dining Room at the White House in Washington, U.S., February 24, 2021. REUTERS/Jonathan Ernst

Register now for FREE unlimited access to

March 1 (Reuters) - A U.S. national security commission on Monday recommended Congress tighten up "choke points" on chipmaking technology to prevent China from overtaking the United States in semiconductors in the coming years.

The National Security Commission on Artificial Intelligence (NSCAI), led by former Google Chairman Eric Schmidt, recommended clamping down on China's ability to procure the manufacturing equipment needed to make advanced computing chips. Such chips are used in surveillance technologies such as facial recognition. (Report:

"China is making an aggressive push to promote authoritarianism around the world," an NSCAI official told Reuters. "It boils down to semiconductors."

Register now for FREE unlimited access to

Much chipmaking equipment comes from U.S. firms such as Applied Materials Inc (AMAT.O) and Lam Research Corp (LRCX.O) which are already subject to American export controls. But key gear also comes from firms such as Nikon Corp (7731.T) and Canon Inc (7751.T) in Japan and ASML Holding (ASML.AS) in the Netherlands.

The report recommends that the United States coordinate with those countries to create a policy of "presumptive denial" in each country for export licenses of advanced chipmaking tools to China. The report also recommends formalizing into U.S. policy a longstanding regulatory practice of limiting China's semiconductor industry to two generations behind the United States.

In addition to steps to protect U.S. and allied chipmaking technology, the report also recommends measures to promote semiconductor manufacturing in America after decades industry migration to Taiwan and Korea.

The $35 billion in proposals for grants and funding for chip plants and research overlaps with $37 billion in chip industry measures that President Joe Biden pledged to support last week. read more

The commission also calls for a 40% investment tax credit for semiconductor tools, which it says would spur chip factory construction in the United States as well as benefit American toolmakers. read more

"Our No. 1 'protect' strategy is to run faster" than China's chip industry, the NSCAI official said.

Register now for FREE unlimited access to
Reporting by Stephen Nellis in San Francisco; Editing by Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

More from Reuters