SIA Cannot Tolerate the Destruction of the Global Supply Chain

 The President and CEO of the American Semiconductor Industry Association (SIA), John Neuffer, stated at the China Development Forum that the chip industry is highly dependent on the global supply chain. No country can fully automate the chip supply chain. The government should reduce restrictions on the export of chip technology and increase investment in basic research to promote innovation in the semiconductor industry.

The American Semiconductor Industry Association represents more than 98% of the semiconductor industry companies in the United States. Neuffer said that semiconductors are the second largest global trade volume industry after petroleum, and an industry that truly relies on a globalized supply chain.

"The semiconductor industry shoulders a heavy responsibility. Whether it is traditional industries such as energy, transportation, and medical care, or emerging industries such as AI, wireless networks, and quantum technology, they all rely heavily on the development of semiconductors. If the supply chain is affected, the industry cannot develop." Neuffer said, "We cannot tolerate the destruction and failure of the global supply chain, and we should seek more cooperation."

In 2020, trade in the global semiconductor industry broke records, with sales increasing by 6.8% to $440 billion. According to SIA's forecast, global semiconductor sales growth will reach 8.4% in 2021.

Just two days ago, Zhou Zixue, chairman of the China Semiconductor Industry Association, said that in 2020, China's chip industry sales increased by 17.8% to 891.1 billion yuan. International cooperation is the only way to solve the chip crisis. The semiconductor industry is a beneficiary of free trade. The United States is mainly responsible for chip research and development, Asia conducts semiconductor wafer manufacturing, and China conducts semiconductor packaging and testing. "If there is no in-depth supply chain and high production efficiency, then we cannot integrate tens of billions of transistors on one chip." Neuffer said.

But in recent months, global demand for chips has surged, and panic purchases have further compressed chip production capacity and even raised the price of all chips, even the low-tech components.

A person in charge of an autonomous driving technology manufacturer told a reporter from China Business News that the company has been unable to purchase autonomous driving chips from a public supplier through past channels and is currently seeking to buy chips from another supplier, but it still encounters difficulties. "Now the price is the last consideration. The problem is that you can't buy chips even if you have money." He told the CBN reporter.

The global shortage of chip supply has also made supply chain issues one of the most concerned topics of this year's China Development Forum. Qualcomm CEO Steve Mollenkopf said he has seen "progress" in his efforts to alleviate the chip shortage. He said: "The response speed to the old version of the chip may be faster." Micron Technology President and CEO Sanjay Mehrotra also said at the same discussion that the company will respond to products based on the market. The company will increase its supply in line with the growing demand for its products.

Neuffer said that although the pandemic has had an impact on the operations of the semiconductor industry, the industry has shown superior resilience and overcame difficulties. "This is also benefiting from the nature of globalization, which enables the industry to respond quickly to the pandemic." He said, "But recently we have seen a global trend of anti-globalization, and even some practices of trade protectionism on the grounds of national security."

Neuffer believes that national security should not be an excuse for trade protectionism. "Most chips should not cause safety concerns, we should minimize restrictions on technology exports, and policy formulation should also try to avoid adverse effects on the development of technology." He said.

He warned of the impact of technology decoupling on industry supply and sales. "In the process of globalization, no country can achieve complete autonomy in the supply chain, and the semiconductor industry still needs to rely on global supply." Neuffer said, "Instead of pursuing the localization of the supply chain, the government should strengthen the resilience of the supply chain and expand market access and demand to make the tariff system of semiconductors more friendly."

Neuffer also made suggestions on the international trade rules of the semiconductor industry. He believes that the WTO is very important to the industry, and in the new economic situation, new ways and rules should be sought to promote trade. At the same time, the government should increase investment in basic research, ensure the training of talents in the industry, and promote the development of the industry with technology.