- Trump orders Chinese firm to sell U.S. chip assets
- 180-day deadline cites national security risks
- Escalates U.S.-China tech decoupling efforts
Donald Trump, the United States President, instructed a semiconductor business based in China to eliminate all assets in America in less than 180 days due to concern for U.S. national security. This decision has increased the already high level of tension in the global semiconductor marketplace.
Chinese semiconductor manufacturer was ordered to divest themselves of all their interests in factories, equipment and intellectual property located in America. In doing so, it may have a serious impact on the global supply chain of advanced technology parts due to ongoing trade tensions between the United States and China.
The instruction comes in response to the findings of a study conducted by the Committee on Foreign Investment in the United States (CFIUS). The study identified risks associated with the potential transfer of technology and the possibility of espionage. The 180-day compliance period limits the amount of time that the firm has to complete this process and specifies the repercussions for failure to comply will include either mandatory divestiture or mandatory shutdown of operations.
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This decision by the administration is part of a larger effort made by the United States to sever supply chains for essential semiconductor materials from China in order to maintain United States' competitive advantage regarding the development of new technologies and products in Artificial Intelligence (AI), Defense, and Computing; the action could lead to businesses shifting their production to allies such as South Korea, Taiwan, India, and others developing new manufacturing capabilities around semiconductors, while increasing production costs for manufacturers around the world that depend on low-cost semiconductor products from China.
While the company being affected by this mandate has not yet made any public statements regarding the situation, it is understood that they are currently in negotiations with potential buyers, which may be either based in the United States or in allied countries. This mandate also reinforces President Trump’s (and his Administration) focus on economic nationalism, and builds on earlier mandates that restricted Huawei and many other companies from doing business with companies in the United States. It may also serve as a precursor for retaliation from the Chinese government.