US Needs Better Chip Strategy to Stay Ahead of China, Industry Official Says

The U.S. should be preparing a strategy to make sure it leads in the next generation of advanced semiconductor technologies, said Romesh Wadhwani, founder of investment firm Symphony Technology Group. Wadhwani also said the funding included in the Chips Act is a good start, but likely won’t be enough to remain ahead of China and shield U.S. supply chains from geopolitical risks.

The Bureau of Industry and Security in October released a new set of export controls designed to limit certain chip-related exports and activities to China (see 2210070049), and officials have said they are examining whether other restrictions are needed. Wadhwani, speaking during an event hosted by the Center for Strategic and International Studies this week, said the U.S. should have a plan to make sure it doesn’t allow emerging chip technologies to be developed elsewhere, including technologies that haven’t yet hit the open market.

He specifically pointed to new developments around 3D transistors, which were mentioned in the BIS October rule. Developments in 3D transistors will lead to a “whole new generation of fabs, a whole new generation of manufacturing equipment, a whole new generation of design software that designs silicon and other types of wafers,” said Wadhwani, a semiconductor expert who most recently founded artificial intelligence company SymphonyAI.

“As that technology matures, the U.S. should have a policy," he said, "some kind of strategy to start with keeping those fabs in the U.S."

BIS last year released a set of export controls on certain electronic computer-aided design software that could restrict emerging chip technologies that aren't yet commercially available (see 2208120038 and 2208250036). Companies have asked BIS to clarify whether the controls apply to software “specially designed” to develop certain 3D transistors, including Gate-All-Around Field-Effect Transistor (GAAFET) structures (see 2209220036).

The U.S. should also have a strategy to lead in spintronics, a technology area that is “not yet ready for commercialization” but which has the potential to make “silicon wafers 10x, 100x more powerful,” Wadhwani said. As that technology develops, companies will create new manufacturing equipment and new related software, he said. “What is the U.S. going to do to encourage these new technologies to come into being, and then to make sure that we don't lose it all all over again, as we did in the case of these two nanometer, three nanometer and 10 nanometer semiconductors?”

He said the U.S. needs a more “generous policy” to make sure China doesn’t lead in these areas. He pointed to China’s recent investments in its own semiconductor industry, a strategy that could help Beijing make breakthroughs in its advanced chip sector and become less affected by U.S. export restrictions. China has “now made a decision apparently that they don't want the U.S. to be able to use sanctions and controls over semiconductors because they are so critical,” Wadhwani said, and “they're willing to invest anything.”

“They invested $2 trillion in this Belt and Road Initiative,” Wadhwani added. “If, by comparison, they have to put $100 billion or $200 billion into semiconductors in China to get resilience and self-sufficiency, they will probably do it.”

The U.S. also is investing in its semiconductor industry, including through the $50 billion in funding in the Chips Act (see 2303210026), but Wadhwani said more is needed. “It's probably not too little, and it's probably not too late,” he said, “but I do think we will have to do more if we want to actually increase our geopolitical resilience.”