By Kate Yuan

(JW Insights) Jul 28 -- US Commerce Secretary Gina Raimondo warned the amount of money that China is pouring into subsidizing what will be an excess capacity of mature chips and legacy chips, on July 26 at a panel hosted by the American Enterprise Institute, reported Bloomberg.

She said that a combination of export controls and domestic incentives will be needed for the US and its allies to fight a glut of semiconductor chips coming with China’s aggressive industry subsidies.

The United States needs to invest in its capacity to produce high-end chips, she said, while preventing the most advanced technology from reaching China.

The Biden administration is working with industry leaders and coordinating with allies on a narrowly tailored set of new export controls, she said, while declining to provide an update on the time line.

Those restrictions, which will build on curbs implemented in October of last year, “will deny some revenue to American companies, but we think it’s worth it” to protect national security, she said.

At the same time, semiconductor companies are primed to benefit from $52.7 billion in direct subsidies to boost domestic chip manufacturing. Those programs in last year’s Chips and Science Act will help the US address a dual challenge in manufacturing low-end and high-end chips, said Indiana Senator Todd Young, who shepherded the legislation through Congress and also appeared at the event.

But Raimondo said that the chip subsidies do not mark the beginning of a new era of industrial policy for the US, given that they’re narrowly tailored to a national security goal. “Will there be other pieces of legislation that are similar? I don’t know, maybe,” she said, according to the Bloomberg report.