As processor chip production is encouraged in the United States, China calls the move an attack on international trade.
This week, President Biden signed a law which promises billions in grants and aid to those who would invest in U.S.-based chip factories. It is partially meant to bolster U.S. industry, and partially meant to cushion other industries against supply chain disruptions.
Most low-end processor chips, which are used in everything from cars to smartphones to medical equipment, are made in Taiwan and China. During the pandemic, shipping restrictions and pivoting priorities made for rolling scarcities that haven’t completely been resolved yet.
The “CHIPS and Science Act,” as the new law is called, demands research spending to total around $200 billion by 2022, according to the Congressional Budget Office. It will include tax breaks for companies building new chip manufacturing plants here in the U.S., and boost related investments in robotics and wireless communication.
China has spent many billions of dollars themselves in developing their own processor chip production industry. While they have warned that any support of Taiwanese independence by the U.S. might have a consequence of more chip shortages and possibly outright war, China is also calling this new funding reminiscent of a “Cold war mentality.”
It will “disrupt international trade and distort global semiconductor supply chains,” said a Foreign Ministry spokesperson, Wang Wenbin. “China firmly opposes that.”
Wang also asserts that the law “restrict companies’ normal investment and economic and trade activities in China,” though he gave no details supporting that claim.
The world is already seeing war-based trade disruptions, with regards to wheat and vegetable oil that would ordinarily be coming from Ukraine. The Russian invasion of that country has caused food shortages in Eurupe and northern Africa. Industry investors are afraid of the same thing happening in tech in case of dissolving relations between the U.S. and China.
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