US Won’t Help Fund China’s Chip Ambitions, Rahm Emanuel Says

Isabel Reynolds, Bloomberg News

An evaluation sample of a chip-on-wafer used for the 2.5D package, developed by the JOINT2 (Jisso Open Innovation Network of Tops 2) consortium, comprised of Showa Denko Materials Co. and 11 other companies, displayed at the Semicon Japan exhibition in Tokyo, Japan, on Wednesday, Dec. 14, 2022. The exhibition will run through Dec. 16. Photographer: Kiyoshi Ota/Bloomberg , Bloomberg

(Bloomberg) -- The US is “not in the business” of aiding rival chip-producing countries, Ambassador to Japan Rahm Emanuel said, as the White House steps up efforts to deny China access to American technology.

“It’s one thing if you’re going to have competition,” Emanuel said on Monday in an interview with Bloomberg Television. “The other thing is if you actually help the competitor compete,” he added. “We’re not in the business of funding and supporting and doing the hard work and research to fund you to compete against us.”

His comments came after the Biden administration last week included dozens of Chinese technology companies on a so-called Entity List, making it almost impossible for them to procure critical foreign components and ratcheting up a trade conflict between the world’s two largest economies. A spokesman for China’s embassy in Washington called the move a “reckless suppression” of Chinese enterprises.

Over the past two months, the US has taken its strongest steps yet to prevent China from buying or making leading-edge semiconductors — crucial for the Asian nation to leapfrog the US in areas such as artificial intelligence and supercomputing. Key US allies, including the Netherlands and Japan, are planning to adopt at least some of the new US rules as well, Bloomberg News reported last week.

Emanuel said the US and Japanese efforts on semiconductors are complementary. He also lauded Japan’s announcement on Friday of a new security strategy, in which it laid out plans for a substantial hike in defense spending, and defined China as an “unprecedented” strategic challenge.

“If Japan wasn’t doing this, you would be asking me what’s taking Japan so long?” Emanuel said of the new defense policy, citing threats from North Korea as well. “Just think about what they are facing today and what the United States as the principle ally of Japan is facing.”

Taiwan Semiconductor Manufacturing Co. Chief Executive Officer C.C. Wei separately warned Saturday of the dangers of excessive government export controls, saying they erode mutual trust between governments. The prolific chipmaker is now building plants in Arizona and Japan amid growing concerns from customers and major governments that the world’s chip production is too centralized in Taiwan.

“Export controls and banning products from other foreign countries destroy productivity and efficiency gained under globalization, or at least they reduce benefits offered by a free market,” Wei said at an industry event in Taipei on Saturday. “But the scariest thing is that mutual trust and cooperation among countries is beginning to weaken.”

--With assistance from Haidi Lun and Shery Ahn.