Semiconductors and Geopolitical Tensions
Semiconductors have become a focal point in the geopolitical landscape, particularly in the escalating tensions between major world powers.
These tiny chips play a crucial role in almost every facet of modern technology. Despite the United States being at the forefront of chip design, the actual manufacturing of advanced chips predominantly takes place in Taiwan. This overreliance on foreign production has raised concerns about national security, with Commerce Secretary Gina Raimondo, 52, highlighting the risks involved.
Raimondo criticized the outsourcing of chip manufacturing, stating that the pursuit of cost savings in labor and capital has compromised national security. The majority of America's advanced chips being produced outside the country poses a significant threat.
Semiconductors and International Relations
The global semiconductor conflict intensified following the Russia's invasion of Ukraine in 2022. In response, the Commerce Department implemented stricter export controls to prevent American semiconductor technology, vital for drones, missiles, and tanks, from reaching Russia.
In a 2022 congressional hearing, Raimondo said that Russia had begun using semiconductors from dishwashers and refrigerators for its military equipment. More than two years into the war, the Russians are still working their way around the semiconductor issue.
"It's absolutely the case that our export controls have hurt their ability to conduct the war, made it harder," Raimondo said. "And we are enforcing this every minute of every day, doing everything we can.
Commerce's Bureau of Industry and Security monitors and polices the ban on any company in the world from selling products with American chips in them to Russia.
Semiconductors and China
Tensions have also escalated between China and the U.S. over access to advanced microchips.
In October of 2022, the U.S. implemented export controls as part of an effort to keep American technology out of China. The restrictions, which focused on advanced semiconductors and chip-manufacturing equipment, were tightened a year later. President Biden addressed it in his State of the Union address this year.
"I've made sure that the most advanced American technologies can't be used in China," he said.
The Chinese warn that these export controls could trigger an escalating trade war.
China emerged as the top supplier of goods to the U.S. in 2022 and ranked as the third largest purchaser of U.S. exports, as per the Office of the U.S. Trade Representative. If trade between the two countries were to cease, approximately 750,000 Americans would lose their jobs.
"We are in favor of conducting trade with China across a wide array of goods and services. However, when it comes to technologies that impact our national security, we draw the line," stated Raimondo.
While high-end microchips are integral components in various consumer products, they also find applications in nuclear weaponry and surveillance systems.
"It is evident that they desire these chips and our advanced technology to bolster their military capabilities," Raimondo emphasized.
Raimondo's firm stance on the issue has made her a target in China, where counterfeit advertisements depict her endorsing a Chinese-manufactured smartphone. In the previous year, the government in Beijing infiltrated Raimondo's email account.
During Raimondo's visit to China last year, tech giant Huawei unveiled a new smartphone equipped with a cutting-edge, Chinese-manufactured chip. Despite the Chinese chip lagging years behind its U.S. counterparts, Raimondo asserted that this scenario validates the efficacy of export controls.
"The United States boasts the most advanced semiconductors globally. China simply cannot match our level of innovation," she declared. "We have surpassed China in terms of technological advancements."
The shift in semiconductor production
While the United States may have outpaced China in semiconductor innovation, Taiwan has undeniably played a pivotal role. Ninety percent of cutting-edge chips are produced in Taiwan, a region that has faced increasing threats from China in recent times.
Amidst rising tensions, China has issued a threat to invade Taiwan, a move that could potentially sever U.S. access to the crucial chips manufactured on the island.
"That's a problem," expressed Raimondo. "It's a risk. It makes us vulnerable."
Raimondo's upbringing provided her with firsthand insight into the repercussions of job outsourcing. Her father spent nearly three decades working at the Bulova watch factory in Rhode Island before the company shifted its operations to China in 1983, leaving many unemployed.
This personal experience influenced Raimondo's career trajectory, leading her to study economics at Harvard and eventually transition from a lucrative venture capitalist role to pursue public office in Rhode Island. She went on to serve as state treasurer and later became the state's first female governor.
Revitalizing Job Opportunities and Manufacturing in the U.S.
In late 2020, President-elect Biden reached out to Raimondo with an offer to head the Commerce Department. The department, previously managing a diverse range of tasks from weather monitoring to assessing household dust contaminants, now took on a new focus under Raimondo's leadership.
Upon assuming her role at Commerce, Raimondo wasted no time in advocating for her $100 billion initiatives. This included securing funding for the bipartisan CHIPS and Science Act, allocating $50 billion towards reducing America's dependence on Taiwanese chip production.
In a recent development in Arizona, Raimondo unveiled her inaugural award for producing cutting-edge chips in the United States, presenting it to Intel. The Biden administration disclosed that the deal would furnish Intel with a potential $8.5 billion in direct funding and $11 billion in loans earmarked for establishing computer chip facilities in Arizona, Ohio, New Mexico, and Oregon.
Furthermore, she has granted two other substantial awards amounting to $13 billion to Taiwan-based TSMC and the South Korean company Samsung, with the aim of manufacturing the world's most advanced chips in Arizona and Texas.
Raimondo is also actively engaged in another major initiative known as the Internet For All program, which aims to connect the millions of Americans, particularly those in rural areas, who lack access to high-speed internet. She believes that collectively, the Internet For All and the CHIPS Act initiatives will generate approximately half a million jobs by 2030.
During her tenure in Washington over the past three years, Raimondo has significantly raised the profile of the Commerce Department and its secretary. The challenges are significant.
"Every day, China strategizes on how to circumvent our regulations," Raimondo remarked. "Consequently, we must approach each day with even greater relentlessness and assertiveness."
