Darin LaHood Warns Of Over Reliance On Chinese Legacy Semiconductors

2 months ago

During a House Select Committee on the CCP hearing last week, Rep. Darin LaHood (R-IL) spoke about reliance on Chinese semiconductors.

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Transcript

00:00Representative LaHood.

00:01Representative LaHood.

00:02Representative LaHood.

00:03Well, thank you, Mr. Chairman. Let me thank the witnesses

00:06for your valuable testimony here today and for this conversation.

00:09And I am pleased that the committee is discussing the

00:12potential impact of the PRC's strategy to dominate three

00:16particular important industries, semiconductors, shipbuilding,

00:20and drones.

00:21Mr. Newhouse touched on this in his comments, but if you

00:25look at China's Made in China 2025 and the 14th Five-Year

00:30Plan, the Chinese Communist Party has made it clear that

00:33they intend to challenge the United States' global economic

00:36leadership, and they are actively advancing their goals as

00:39we speak.

00:40President Xi has stated that he aims to achieve 70 percent

00:44self-sufficiency in high-tech industries by 2025 and market

00:50dominance by the 100th anniversary of the PRC in the year 2049.

00:58We know that the CCP is investing billions across

01:00strategic industrial sectors, such as semiconductors, new and

01:04emerging technologies, and energy, such as solar and EV

01:08batteries, all in an effort to gain dominant control over the

01:12global market.

01:13In fact, the Wall Street Journal recently reported

01:16that the PRC-based semiconductor manufacturing international

01:19corporation is aggressively adopting homegrown semiconductor

01:23production equipment into its product line, part of a broader

01:28campaign to eradicate American technology in the PRC.

01:33They dubbed this, quote, delete A, unquote.

01:38That article that I'm referencing was dated June 3, 2024,

01:42in the Wall Street Journal, titled, The Goal of China's Chip

01:46Giant, semicolon, Cut Out the U.S.

01:50China's domestic chip industry strives for self-sufficiency.

01:54Mr. Chairman, I would ask to submit for the record this article

01:57from the Wall Street Journal.

02:00Thank you.

02:01Whether it be through subsidized state-owned enterprises that

02:07do not play by the same rules as their competitors, the use of

02:10coercive tactics to manipulate the global market, or forcible

02:14transfers of technology and intellectual property, the CCP

02:17clearly is willing to do whatever it takes to achieve this

02:20goal.

02:21Dr. Miller, in your written testimony, you draw a

02:23comparison between China's increased subsidy campaign for

02:26semiconductors and their efforts to dominate the solar panel and

02:30EV battery markets.

02:31You note that such control over a given market can create a

02:35strategic advantage that may be exploited by the PRC down the

02:39line.

02:40Consequentially, this committee has heard from a number of

02:42companies that rely heavily on Chinese-manufactured EV batteries

02:46and solar panels, making it difficult to de-risk their supply

02:50chains out of China.

02:52Can you talk a little bit about what steps we need to be making

02:56to work with our allies and trading partners to prevent the

02:59over-reliance on Chinese legacy semiconductors and avoid

03:03similar flashpoints?

03:04Representative, today, as I mentioned in my oral remarks,

03:08most foundational semiconductors are manufactured in the West,

03:10in the United States, in Japan, in Europe, or in Taiwan.

03:14But that's changing as China invests more right now.

03:17And so the key for policy measures is to stop the new

03:20investment that's being made in China from reaching Western

03:23markets in large quantities.

03:25I think there are several approaches you could take to

03:27address this problem.

03:27The first is trade measures.

03:29The second is restrictions on the use of Chinese components

03:32and critical systems.

03:34And the third is to restrict the access of individual Chinese

03:37firms that are particular challenges or security risks to

03:40sell into U.S. markets.

03:41I think some mix of these policies would be an effective

03:44response to the risk that we become more reliant,

03:47excessively reliant, on chips produced in China.

03:50And those three things you mentioned, how do you grade the

03:53current administration on the implementation of those three?

03:56There have been steps taken on each of those fronts, but I

03:59think there is more work to be done.

04:02And as a follow-up, you draw a distinction between legacy

04:04semiconductors and advanced small node semiconductors.

04:08When we in Congress talk about semiconductors, it is rare that

04:11the distinction is made.

04:13Should we be approaching policy solutions that would apply

04:16broadly to both advanced and legacy chips, or is it more

04:19effective to distinguish between those two types of

04:21technologies?

04:23Representative, I think we need to distinguish between these

04:25two categories.

04:26In advanced chips, we and our allies have a major

04:29technological advantage over China.

04:31When it comes to foundational semiconductors, China in many

04:34cases is close to the cutting edge in foundational chips.

04:38And so our ability to restrict their access to technology is

04:41less significant in the sphere of foundational semiconductors.

04:44Moreover, the use of Chinese foundational semiconductors is

04:47already present in U.S.

04:49manufacturing supply chains.

04:50And so we need to be careful when we take restrictive

04:52measures not to do so too rapidly in a way that would

04:56enable or make it difficult for U.S.

04:57firms to continue their existing manufacturing operations.

05:00That's why I think for any measure we take, we should phase

05:02it in over time to give U.S.

05:05manufacturers time to adjust to any potential supply chain

05:08issues.

05:09Thank you.

05:10I yield back, Mr. Chair.

05:11Representative Brown.

Darin LaHood Warns Of Over Reliance On Chinese Legacy Semiconductors

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