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How the United States marched the semiconductor industry into its trade war with China

Chad Bown ()

No WP20-16, Working Paper Series from Peterson Institute for International Economics

Abstract: The US-China trade war forced a reluctant semiconductor industry into someone else’s fight, a very different position from its leading role in the 1980s trade conflict with Japan. This paper describes how the political economy of the global semiconductor industry has evolved since the 1980s. That includes both a shift in the business model behind how semiconductors go from conception to a finished product as well as the geographic reorientation toward Asia of demand and manufactured supply. It uses that lens to explain how, during the modern conflict with China, US policymakers turned to a legally complex set of export restrictions targeting the semiconductor supply chain in the attempt to safeguard critical infrastructure in the telecommunications sector. The potentially far-reaching tactics included weaponization of exports by relatively small but highly specialized American software service and equipment providers in order to constrain Huawei, a Fortune Global 500 company. It describes potential costs of such policies, some of their unintended consequences, and whether policymakers might push them further in the attempt to constrain other Chinese firms.

Keywords: Export restrictions; supply chains; national security; semiconductors; Huawei; US–China trade relations (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2020-12
New Economics Papers: this item is included in nep-cna, nep-his and nep-int
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Journal Article: How the United States Marched the Semiconductor Industry into Its Trade War with China (2020) Downloads
Working Paper: How the United States marched the semiconductor industry into its trade war with China (2020) Downloads
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