U.S. Chip Industry Fears Long-Term Damage From China Trade Fight

The U.S. semiconductor industry is pressing to get out of the firing line between the U.S. and China, warning its position as the global market leader could become a casualty of the trade spat, The Wall Street Journal reported.

The industry is ramping up its lobbying with a new report spelling out potential costs of largely severing U.S. chip-supply ties with China.

The effort comes as cabinet-level officials are set later this week to meet and discuss proposed changes to Commerce Department regulations that would further restrict U.S. sales to Chinese companies that U.S. officials have said pose espionage risks. Some in Washington also believe these companies purloin U.S. technology, according to people familiar with the administration’s discussions.

The chip industry is one of the top U.S. exporters and one of the few sectors that still generates a trade surplus, largely driven by sales growth in China. But many in the Trump administration want to limit those links and get chip makers to do more of their manufacturing work in the U.S.

Chip companies have already lost sales from dueling tariffs both sides have imposed and from limits the U.S. has put in place on sales to Chinese telecom giant Huawei Technologies Co., citing national-security concerns. President Trump last month indicated he was eager for U.S. companies to be able to freely sell products to China. But, according to people familiar with the matter, administration officials leery of dealing with China are pushing for additional trade restrictions by invoking further national-security concerns.

Such measures, the Semiconductor Industry Association says, would do lasting harm to companies that made Silicon Valley a byword for U.S. innovation and help the country maintain a technological and military edge over global rivals, the Journal adds.

Export restrictions can help safeguard U.S. national security, “but they must be targeted to avoid undermining America’s longstanding global leadership in semiconductors,” said Keith Jackson, chief executive of ON Semiconductor Corp., an electronic-components supplier based in Phoenix.

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