Amid a wave of consolidation in the semiconductor industry, the Obama administration is reportedly preparing a “blueprint for action” to help the incoming Trump administration protect U.S. intellectual property. According to The Wall Street Journal, President Barak Obama plans to leave President-elect Donald Trump with a report on “China’s strategic efforts to dominate the semiconductor market.”
John Holdren, director of the White House office of science and technology policy, is expected to release the report before the Jan. 20 inauguration. Earlier this year. Holdren noted that leadership in semiconductor manufacturing is key to both economic growth and national security.
The U.S. can block foreign control of American semiconductor companies through the Committee on Foreign Investment in the U.S. This committee includes officials from nine executive offices, including the departments of Defense, Treasury, State and Justice.
Last month, the Obama administration blocked Chinese investors from purchasing the U.S. assets of Aixtron, a German company that makes gallium nitride chip technology. The move followed Germany’s decision to disallow the Chinese acquisition of the parent company.
Most Chinese electronics are made with chips designed in other countries. The Chinese government has created a $160 billion fund to increase domestic semiconductor design, a goal that can be accomplished through acquisition as well as by licensing chip technology from foreign companies. Outright acquisition of intellectual property is the most direct route, and as the chip industry consolidates many smaller companies are likely to look for buyers in order to stay in business.
Within the last 24 months, Broadcom, Altera, Freescale, NXP, Spansion, LSI and Altair have all agreed to be purchased by other chipmakers. More than half those deals are international acquisitions, but none involve Chinese companies.
Two of China’s biggest chipmakers are HiSilicon, a subsidiary of Huawei, and Spreadtrum, which has reportedly earmarked $40 billion to become the world’s third-largest chipmaker.
