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Biden Likely to Continue Export Controls, Semiconductor Investment to Counter China, Expert Says

When the Joe Biden administration takes office, it will likely continue the Commerce Department's emphasis on export controls and entity listings to stay ahead in technology competition with China, said Eric Sayers, an Asia-Pacific policy expert with the Center for a New American Security. Although both tools have been heavily used by the Trump administration, Biden might do more to convince allies to also impose those restrictions, especially as the U.S. fights to maintain commercial leadership in the semiconductor sector, Sayers said.

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“I would expect a Biden administration to continue in many ways to deploy some of the same tools the Trump Commerce Department has when it comes to export controls,” Sayers said during a Nov. 12 event hosted by the Brookings Institution, adding that Biden’s stance on Huawei is also likely similar to the policy under the Trump administration. But “there may be an effort to go even further and focus on multilateral controls,” Sayers said. Biden would likely seek to work more closely with Japan, South Korea and Taiwan, he said, especially as the Taiwan Semiconductor Manufacturing Corporation prepares to build a facility in Arizona (see 2005150033).

“I think the Biden campaign was very clear that they didn’t necessarily agree or disagree with the ends” that the Trump administration was seeking, Sayers said, just that “they just disagreed with the means. They thought we could go about it in a more multilateral way.” Sayers said companies should not plan for less export restrictions as long as the issue of Chinese technology theft remains.

“I think those are going to be difficult conversations, conversations that Taipei and Tokyo and Seoul and others don't necessarily want to have,” Sayers said. “This will inevitably mean more difficulty for companies like TSMC and MediaTek in the semiconductor realm.”

Although trade restrictions will likely continue, so will efforts to invest in domestic semiconductor manufacturing and innovation, Sayers said. If the Senate continues to be controlled by Republicans, Biden will likely look to support existing semiconductor legislation, Sayers said, such as the CHIPS for America Act, which would incentivize U.S. semiconductor manufacturing and provide more federal support for research and development (see 2006110038 and 2007240010).

Although Sayers said determining how to appropriate funds for the bill will be a “fight,” he said he thinks the bill will be passed because of its strong bipartisan support. “This is really an effort to enhance some of the funding for not just the TSMC plant facility in Arizona, but competitively for other American companies to expand their own semiconductor manufacturing base here in the United States,” he said. Sayers also said the legislation represents a broader U.S. shift toward also using domestic policy tools to compliment its foreign policy actions, such as export controls.

“We've seen Congress and the administration over the last two or three years focus so much on the defense side, how we control investments and the restrictions on technology,” Sayers said. But now the U.S. is moving toward a “more balanced agenda where you see this offense piece too.”

Even so, the approach creates issues for semiconductor companies, such as TSMC and Taiwan-based Foxconn, which have had to choose in some cases between the U.S. and China, said Syaru Shirley Lin, an Asian policy expert at the Brookings Center for East Asia Policy Studies. She also said these companies are often left out of technology policy decision-making in both Taiwan and the U.S.

“Many of them feel like unintended victims,” Lin said during the event. “Private companies need to really think about where they will be most competitive, now that we're going into two separate systems.” She also said a clearer policy approach from the U.S. would help industry make better decisions. “Is the U.S. trying to make China part of the standards that the United States would like to see? Or is it trying to really decouple in order to punish China?” Lin said. “I think these are questions that need to be answered before everyone else can comply and work together.”