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Commerce’s Ross: China’s plans threaten U.S. semiconductor dominance

U.S. Commerce Secretary Wilbur Ross sees the U.S. semiconductor industry as still dominant globally but said he is worried that it will be threatened by China’s planned investment binge to build up its own chipmaking industry.

Ross told Reuters in an interview this week that his agency is considering a national security review of semiconductors under a 1962 trade law because of their “huge defense implications” including their use in military hardware and proliferation in devices throughout the economy.

He has launched similar “Section 232” reviews of the U.S. steel and aluminum sectors, where a flood of imports especially from China has depressed prices, threatening the industries’ long-term health.

The probes could lead to broad import restrictions on the metals, and the Trump administration could potentially take similar actions based on the findings of a semiconductor investigation.

“Semiconductors are one of our shining industries, but they have gone from substantial surplus to the beginnings of a deficit,” Ross told Reuters. “China has a $150 billion program to take that much further between now and 2025. That is scary.”

The 79-year-old billionaire investor was referring to China’s plans for massive state-directed investments in semiconductor manufacturing capacity under its “Made in China 2025” program, which aims to replace mostly imported semiconductors with domestic products.

Ross’ predecessor at Commerce, Penny Pritzker, warned last November about looming market distortions if China builds too much semiconductor capacity.

Ross added that while he understands Beijing’s logic in developing its domestic chip industry, “that’s going to be a struggle” from a U.S. trade standpoint.

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