China trade dispute could hamper US semiconductor production

Published: Sep. 6, 2023 at 5:34 PM EDT
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ESSEX JUNCTION, Vt. (WCAX) - The U.S. and China remain at odds when it comes to trading in the technology sector, and the dispute could have direct implications on U.S. semiconductor manufacturers like GlobalFoundries, one of Vermont’s largest employers.

The U.S. limited investments in the Chinese semiconductor industry at the beginning of August and China fired back, restricting the export of raw materials needed to assemble them.

Matt Dickinson, a political scientist at Middlebury College, says national security is at the root of the executive order from President Biden and backed by bipartisan support. But he says the move also comes with risks. “Every time you cut off a country’s access to goods is that they retaliate -- as China has done – restricting raw material we need to make semiconductors,” Dickinson said. “It hurts the U.S. domestic producers of those goods. They need to find other markets. That means it may cost jobs both here domestically, but it could also increase the price of products consumers use.”

One company that might be impacted by this is GlobalFoundries. The company’s Kelsey Mattoon declined to speak to the ongoing situation with China, other than to say they’re assessing it. She says the production process for their microchips is extensive. “Some of the wafers can go through up to 1,300 different steps to create the finished product,” Mattoon said.

About 1,800 people work at GlobalFoundaries Essex Junction facility. It’s about 500,000 square feet or about the size of nine football fields. They produced $8.1 billion worth of chips in 2022, just a fraction of the country’s $275 billion semiconductor industry.

The company’s David Yao says the chips they make are crucial in most, if not all, pieces of modern technology. “If you’ve made a phone call, communicated over Wi-Fi or the internet, made a bank transaction, it’s very likely you sent data manufactured on a chip made here,” he said.

Dickinson says the Biden administration recently invested $50 billion into the semiconductor industry and is offering tax breaks for private investors, which could help bolster it from the trade dispute. “Generally, both countries understand that their economies depend on being able to trade with each other, so there are limits on how far they’re willing to pursue these restrictions. Usually, there’s some kind of negotiated compromise and that’s kind of what you would hope would happen here,” he said