Washington, UK Hinder Silicon Valley’s Chip Production Plans in China

Silicon Valley’s chip production is lurching to enlarge its investments in Chinese semiconductor firms, as Washington’s rising tension of upholding its status in global innovation could be overthrown by Beijing’s bid for chip-sector sovereignty.

One of the companies joining the semiconductor progression is Intel Corp. The chip manufacturer is backing Chinese company Primarius Technologies Co., specializing in chip design. The Shanghai-based manufacturer mainly focuses on chip design tools that American firms are currently leading the market in, according to analytics firm PitchBook Data Inc.

In parallel, Silicon Valley’s Chinese affiliates such as Sequoia Capital, Lightspeed Venture Partners, Matrix Partners, and Redpoint Ventures are empowering their connections with U.S. tech companies by investing in more than 67 investments in Chinese chip manufacturing companies since early 2020. 

According to PitchBook Data, Silicon Valley’s chip production has pushed firms to engage in financial rounds investments, raising billions of dollars of the country’s startups. This could potentially hold detrimental outcomes to the U.S. as it is currently trying to uphold its position as the leading powerhouse in vital technologies.

The escalating tensions between economic powers have reached an all-time high with this wave of heavy investments from Silicon Valley giants into the Chinese market, leading to a decisive shift in geopolitical power between the East and the West.

Intel’s role in this state of affairs is directed by its need to secure massive funding to maintain chip production. As it attempts to hasten its manufacturing plans in China, the Santa-Clara-based firm has been counteracted by Washington, according to Bloomberg.

The news hub revealed Intel announced undisclosed proposals of creating silicon wafers in a Chengdu-based factory, with plans to initiate production by the end of 2022. However, it seems that its maneuverings might be put on hold as the White House “strongly discouraged” its plans under the pretense of national security.

From its part, Intel stated that it is not planning on initiating any Chinese production for its silicon wafers following its discussions with Washington officials, adding that it will contemplate other alternatives.

“Intel and the Biden Administration share a goal to address the ongoing industrywide shortage of microchips, and we have explored several approaches with the U.S. government,” Intel informed Bloomberg. 

Some of the chip manufacturer’s alternatives may be directed towards pumping heavy investments to American and European silicon wafer producers, in compliance with Washington’s demands to maintain chip manufacturing within U.S. borders.

Skepticism following Chinese firms has led forceful global entities to take actions to halt back Beijing’s technological development, with the UK intensifying its probe on previous, current, and potential acquisitions.

The UK authority has expressed its dissatisfaction with NVIDIA’s ARM acquisition, as per Reuters report. Speculations surfaced that the Digital and Culture Secretary, Nadine Dorries, will launch a probable investigation led by the Kingdom’s Competition and Markets Authority to initiate a “phase two” examination into NVIDIA’s acquisition over probably national security threats.

While the announcement has yet to be publicized by the governmental entity, The Times announced that it could come as soon as next week, with a second investigation launch that could potentially take about six months.

It is worth mentioning that any credible examination could result in the graphics chipmaker being forced to sacrifice some of its periodic plans, as the investigation could get UK officials’ approval by 2022, followed by the final regulatory approval before optimal merger completion.  

Once the Authority’s probation is finalized, officials would have the power to either terminate the deal, approve it without adjustment, or demand additional compromises to accommodate the Department’s demands.

The UK’s Department of Digital, Culture, Media, and Sport refused to comment on the matter while NVIDIA revealed its current emphasis is directed at moderating concerns concerning ARM’s neutrality once the deal finalizes if it closes.

The global chip shortage is sweeping Silicon Valley’s chip production from its core, as it spreads to larger innovative areas by the day, heightening demand, and by default increasing the crisis’ intensity. As Beijing is in full-throttle mode to usurp Washington from its global thrown in critical technologies, tech and manufacturing firms are caught in the antagonism between economic powerhouses.