China's ambitions in the semiconductor industry have weighed heavily against US companies in recent years. First, as a long term threat, in the event that some of China's goals are reached. Later, as an effective tax on US companies, from the effects of the trade war and actions against Huawei. Now, these effects may finally be counterbalanced thanks to two stimulus bills that are currently being considered by Congress.
In the spring of 2018 I met with the CFO of a Chinese semiconductor industry company who repeatedly asked me if the FBI knew I was there. I was surprised by the question and quietly amused, and reassured him that the FBI didn't care about my investment research. However, I shouldn't have been amused. Some are now insisting that we are in Cold War 2, and that this was obvious in China before it was obvious in the US.
One important part of the genesis of the current conflict started with China's Made in China 2025 initiative. While I won't rehash the rationale for the trade war with China and the many forms of preferential treatment that Chinese companies are alleged to receive, it's worth mentioning China's Big Fund Phase 1, amounting to around $20 billion, and Phase 2, at around $29 billion, raised to invest in the country's semiconductor industry. This is in addition to tax benefits, provincial and city funds, and various forms of policy assistance.
One of the few bipartisan issues in the US is concern over the increased rivalry with China. In addition, the Covid-19 pandemic has increased concern about having production of critical goods in distant countries. To address these two related issues, Congress introduced two bills in June that would improve the competitiveness of US semiconductor producers, and increase domestic production. If passed, these two bills will have very significant financial and
