US, China must restart talks to end trade war, industry execs say

This article is co-written by Sarah Dai.

The US and China will need to return to the negotiating table and seek an end to their trade war, which would help spur more advances to be made in the highly interdependent field of semiconductors.

“This is now a global industry, with everyone dependent on everyone else with these amazing, sophisticated supply chains,” said John Neuffer, president and chief executive of the Semiconductor Industry Association (SIA), at the IC China conference in Shanghai on Tuesday. “It’s very clear that no one country – no one company – can do it all.”

Photo credit: Li Yang

His view echoed those of other senior industry executives at the conference amid concerns that a prolonged US-China trade dispute could seriously disrupt the sector’s complex, geographically widespread, and intertwined value chain and ecosystem that has evolved over decades.

What has been “very troubling for our industry are the growing calls for decoupling the supply chain […] [as if the industry] can somehow survive and thrive in a bipolar [global] economy,” said Neuffer, whose Washington-based trade group represents major semiconductor firms such as Intel Corp, Qualcomm, Micron Technology, and Broadcom Corp.

Despite the trade tensions, Neuffer has called on governments around the world to resist decoupling supply chains and disentangling economic cooperation. “We need to get back to the table to negotiate a win-win outcome in trade negotiations between China and the US,” he said.

The trade war, however, has intensified Beijing’s resolve to boost self-sufficiency in strategic technologies, including semiconductors. These complex, tiny devices are critical to the function of everyday consumer electronic, communication, and computing products, as well as increasingly sophisticated equipment in a range of sectors, from aerospace and financial services to health care and retail.

Washington, meanwhile, has ramped up efforts to cut Chinese firms off from American hi-tech suppliers. Talks to resolve the trade war ended without agreement in May, sparking a wave of targeted actions by the Trump administration that included a US trade ban on Huawei Technologies
over national security concerns.

The US government’s actions have laid bare the soft underbelly of China’s hi-tech ambitions, as the country remains dependent on major US and European companies for high-end integrated circuits.

Zhou Zixue, chairman of Hong Kong-listed Semiconductor Manufacturing International Corp, mainland China’s largest contract chip maker, doubled down on the SIA chief’s call by urging more companies around the world to continue with their research and development collaborations.

“We need to work together to create an open, inclusive, and mutually beneficial environment, learning from one another and pursuing […] collective growth,” Zhou said.

He indicated that China’s semiconductor sector has already been affected by the trade dispute, with the domestic industry’s outlook remaining cautious.

The country’s annual chip imports have surpassed that of crude oil in recent years to reach US$312 billion in 2018.