Chapter Nine: Mitigating the Impact of China’s Nonmarket Behavior in Semiconductors
The United States and its partners should be on guard to mitigate nonmarket behavior by China’s emerging semiconductor firms. While starting from a weak position, China’s leaders are aggressively pursuing their domestic semiconductor aims—first to reduce the country’s dependence on imports and then to take global market share through chip supply chain exports. As witnessed in a raft of other industries, the variety of government targets and subsidies to this end imply a high likelihood that semiconductor firms in China operating under nonmarket incentives may undercut pricing of established US and partner semiconductor firms. This nonmarket behavior by semiconductor firms in China could have negative near-term impacts on US or partner producers, for example in mature chip production. And over time, it could create new US or partner dependencies on China-based supply chains that do not exist today, impinging on US strategic autonomy.