‘Unilateral’ Export Controls Harm US Chip Companies, Says Intel Strategist

Intel “generally” opposes the U.S. putting “unilateral export controls” on foreign tech companies suspected of threatening U.S. national security, Tom Quillin, senior director-security and trust policy, told a virtual forum convened Thursday by the Commerce Department’s Bureau of Industry and Security to identify risks in the semiconductor supply chain. BIS said it will use feedback from the forum, plus comments received in its notice of inquiry, to help shape recommendations to the White House on President Joe Biden’s Feb. 24 executive order to relieve supply chain bottlenecks (see 2103110054).

BIS export restrictions “place undue hardship on U.S. semiconductor companies, especially when similar items are available in foreign markets,” said Quillin. “The foreign availability of products and technology typically leads to the substitution of U.S-origin products and technology for comparable non-U.S.-origin items that are not similarly controlled.” He didn't mention Huawei and other Chinese companies on the BIS Entity List.

Quillin and other tech industry panelists disagreed somewhat about how the federal government should prioritize financial incentives to boost U.S. competitiveness in semiconductors. One priority should be helping modernize outdated U.S. fab capacities that are “on the bubble,” said Patrick Wilson, MediaTek corporate vice president-government affairs. Wilson favors creating a “first do no harm” policy to “lock up vulnerable fab capacity,” he said, emphasizing he was speaking for himself, not for MediaTek. “What can you do if a fab is nearing the end of its useful life to encourage that fab owner to retrofit or add new equipment or find new customers?” he said.

Government and industry should look at prioritizing the “leading edge” in semiconductors because that will be “where competition comes to a head,” said Intel’s Quillin. He cited with obvious regret a recent Semiconductor Industry Association survey finding the U.S. controlled zero capacity of semiconductor production in advanced nodes under 10 nanometers. “It’s critical for the U.S. to regain its leadership there,” he said.

But GlobalFoundries Senior Vice President Michael Hogan disagreed, saying the government instead needs to prioritize “the breadth at which the investment benefits complete industries.” Regaining U.S. leadership in leading-edge chips, as Intel advocates, is “an important capability,” said Hogan, “but that’s not what’s going into all your cars today” or enables “you to take pictures from your phone.” Hogan is general manager of his company’s Automotive, Industrial and Multi-market Strategic Business Unit. “I think you need to be more even-keel there,” he said, emphasizing he didn’t want to sound “too contrarian.”

Semiconductors remain “one of America’s largest exports, yet U.S. share of semiconductor manufacturing has eroded from 37% several decades ago to 12% today,” said Quillin. Advanced semiconductor packaging and other segments of the supply chain “have eroded a lot more,” he said. The “hard truth” is that U.S. semiconductor production “will decline to a point of irrelevance if Washington doesn’t start investing in new production facilities,” he said.

The U.S. must take the global lead in semiconductor R&D, fabrication and manufacturing, said Quillin. Doing so “will drive the greatest momentum for new innovation,” he said. The administration “should develop policies that promote adoption of best practices for business continuity planning and promote increased supply chain transparency,” he said.

The White House will hold a summit with the tech industry Monday to address global semiconductor shortages and other supply chain issues. Nearly two dozen major companies will take part, including AT&T, Dell Technologies, Ford, General Motors, Global Foundries, Google, HP, Intel, Micron Technology, NXP, Samsung and Taiwan Semiconductor Manufacturing Co. White House National Security Adviser Jake Sullivan, National Economic Council Director Brian Deese and Commerce Secretary Gina Raimondo will also participate. Semiconductor Industry Association President John Neuffer said the summit is an “important opportunity” to determine how to fund investments in domestic U.S. chip production.