Hard Stance – Biden’s Semiconductor Policy
The Biden administration has made a lot of decisions regarding policy toward semiconductors. Semiconductors, more commonly known as chips, have been a major talking point during the pandemic due to how the world is moving now. Chips are necessary for almost everything we use in our lives, from refrigerators to cars. The high demand did not fare well given the supply chain issues that the economy faced and this forced the US to rely on exports to keep up. Empowering rivals like China came as a byproduct and, considering how tight geopolitical tensions are between the two, Biden came to another decision over the weekend.
The government, in accordance with the Commerce Department, has introduced new restrictions on exports that will work to place American chips in the hands of Americans only. US chip makers will now have to obtain a special license from the Commerce Department to export chips used in AI technology and supercomputing. The reason it’s only these types of chips is that they are used to create cutting-edge technology, especially in the areas of military and surveillance. The US government has good reason to believe that some of their technology is fueling the Chinese government and military, with harsh surveillance methods contributing to crises like the one we see with the Uighurs. This move was supported by both sides of the aisle, but there are concerns as to how loopholes can be created. Many American allies export to China, so American chips can go to China through these countries as a sort of a “middleman” per se. China criticized the decision, saying that it would harm the global economy and the supply chains. Semiconductor stocks fell after the news, signaling the industry might be worried as we head into earnings season.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.