The chip shortage in the global market has become a new controversial issue between the United States and China. Now, the US Senate has passed a bill to help chip manufacturers operating in the country. But it seems that this is not what China likes.
Up to now, the chip shortage has affected both industries and customers. Due to declining production and high demand, the price of electronics has risen significantly. This shortage even affects smartphone shipment in Q2 2021.
The new bill by the US Senate focuses on providing billions of dollars to chip makers in the United States to make up for the market shortfall.
Currently, China has a significant share of the world chip market. This could be a potential threat to China if US companies can increase their market share.
The bill aims to boost production on US soil and reduce dependence on China. Biden’s administration also said it’s ready to provide funds for US-based chip makers.
The US Senate wants to support the semiconductor industry in the country
The amount of funding considered in the bill is $190 billion that will be allocated to R&D centers at universities. Another $52 billion is also available for manufacturers to increase production.
Lack of sufficient funding to develop the US chip industry is one of the main reasons why the country has ceded the semiconductor industry to China.
As per Xinhua News Agency, China has asked the US to stop the bill immediately. They believe this bill is a kind of interference in China’s internal affairs. However, the Senate majority has expressed their support of the bill by a 68-32 vote.
According to Senate Majority Leader Chuck Schumer, this bill is “one of the most important things [the Senate] has done in a very long time.” But, of course, the bill is not finalized yet. The House of Representatives needs to comment on it.
China is not happy with the bill
It was to be expected that China would be angry at the passage of such a bill. Because its dominance of the world chip market is a strategic matter for them, and strengthening US chipmakers could lead to less Chinese dominance in the market.
The House of Representatives needs to pass the bill as well, and they will likely do so. Schumer says he had a negotiation with House Speaker Nancy Pelosi and House Science Committee Chair Eddie Bernice Johnson about the bill.
According to Chinese officials, the bill “smears China’s development path and domestic and foreign policies and interferes in China’s internal affairs under the banner of innovation and competition.”