Semiconductor Industrial Policy Muddled, US China Commission Told

A German think tank's semiconductor specialist told the U.S. China Economic and Security Review Commission he's concerned that the policy focus on bringing more production back to the EU or U.S. won't achieve its aims because policymakers aren't sure what those aims are. "We have to be very clear about the objective," Jan-Peter Kleinhans, technology and geopolitics project director at Stiftung Neue Verantwortung in Berlin, testified Thursday at a commission hearing on supply chains and China. "Is it national security, is it technological competitiveness or is it global supply chain resilience?" If the objective is security, it's most important to develop packaging and printed circuit board capabilities, not fabs, he said, but those functions are labor-intensive, and can't be done economically in Germany or the U.S. If resilience is the top priority, Kleinhans said, policymakers need to understand that the recent chip shortages "were not the result of our dependence on China or East Asia," but because companies significantly underestimated demand. 'We need the end users at the table," he said. The Commerce Department should be asking big chip purchasers what cost differential they're willing to pay for a Taiwan Semiconductor Manufacturing Co. wafer made in Arizona rather than Taiwan, he said. "If you cannot get a very specific answer to that rather simple question, you will have a hard time to come up with sustainable business cases for these newly established fabs," Kleinhans said.