Semiconductors Are Supply Chain and National Security Issues... US and Japan Accelerate Support Legislation

President Joe Biden of the United States [Photo by AP]

[Asia Economy Reporter Jeong Hyunjin] As competition to dominate the semiconductor sector intensifies, major countries such as the United States, Japan, and Europe have been actively preparing legislation to support the semiconductor industry and establish supply chains. With the outbreak of the Russia-Ukraine war and the expansion of measures to counter China adding national security issues, governments and legislatures are working in tandem to accelerate semiconductor support.

At the end of last month, the U.S. Congress passed the “Chips and Science Act,” which provides $52 billion (approximately 70 trillion KRW) in subsidies for semiconductor manufacturing facilities. Ahead of the summer recess in August, the U.S. Senate began discussions on July 19 and passed the bill in less than ten days, followed by the House of Representatives approving it the next day. The time from the Senate’s start of deliberations to President Joe Biden’s signature was less than a month.

The passage of the semiconductor support bill in the U.S. Congress was not easily achieved. The Biden administration, recognizing the disruption of semiconductor supply chains caused by COVID-19, has been emphasizing the necessity of such legislation since last year. Both the Senate and House had previously passed related provisions in the U.S. Innovation and Competition Act and the America COMPETES Act, respectively.

However, conflicts arose between the Republican and Democratic parties over the bill’s details, stalling progress. In response, the Democrats separated the industrial support sections common to both bills and pushed for their passage as a standalone bill, which Congress quickly approved. U.S. government officials led by Commerce Secretary Gina Raimondo and semiconductor industry figures such as Intel CEO Pat Gelsinger actively appealed for swift national support, to which Congress responded.

Congress also passed the “Inflation Reduction Act” to support advanced industries on the 7th in the Senate and the 12th in the House, with President Biden signing it into law just four days after clearing Congress.

Japan enacted the “Economic Security Law” in the first half of this year to strengthen semiconductor supply chains and protect advanced technologies. This is a flagship policy of Prime Minister Fumio Kishida. The bill passed the House of Representatives’ Cabinet Committee on April 6, was approved by the full House later that month, and passed the House of Councillors on May 11. Support came not only from the ruling coalition of the Liberal Democratic Party and Komeito but also from opposition parties such as the Constitutional Democratic Party, Nippon Ishin no Kai, and the Democratic Party for the People.

The Nihon Keizai Shimbun reported at the time of the House of Councillors’ approval that “Considering Russia’s invasion of Ukraine and China’s hegemonic actions, the need to protect Japan’s industry and technology as a national strategy has increased,” but added, “Although the legal framework has taken a step forward, it lags behind the U.S. and Europe, prompting the government to expedite new reviews.”

The European Union (EU) is pushing for legislation to support semiconductors with $43 billion in funding by 2030. Taiwan, after enacting the “National Key Areas Industry-Academia Cooperation and Talent Cultivation Innovation Ordinance” in May last year through its Legislative Yuan, prepared an amendment to the Cross-Strait Relations Ordinance in February to legally prevent the outflow of its advanced technology personnel to China. The Legislative Yuan passed this amendment in May, three months later.

This content was produced with the assistance of AI translation services.