U.S.

On Monday, SEMI led a statement from a coalition of industry groups calling on governments worldwide to harmonize their policies to safely allow essential international travel by essential workers. Cross-border mobility in the semiconductor and microelectronics industry is vital to maintaining manufacturing critical to the production of semiconductor devices that are the foundation of our modern economy, countless economic sectors and each nation’s response to the COVID-19 pandemic. Uniform cross-border travel rules impacting essential businesses in the electronics supply chain are crucial for semiconductor business infrastructure and supply chains to maintain effective operations.To that end, SEMI is urging governments around the world to permit international travel by semiconductor supply chain engineers, technicians and executives with minimal disruption to ensure any fast-tracked procedures apply directly to the semiconductor industry and that any agreements negotiated among countries harmonize global travel procedures and processes. Global supply chains require cross-border travel by key technical personnel and business continuity decision-makers to ensure that essential industry manufacturing and business operations remain efficient, effective and uninterrupted. While the industry continues to implement safety protocols and minimize non-essential travel to stem the spread of COVID-19, highly sophisticated equipment sets and materials usage from multiple nations will at times require specialized expertise that is not present in-country.For example, technicians from a semiconductor manufacturing equipment company typically must travel to semiconductor factories in other countries to install or repair specialized tools in situations that are beyond the expertise of the local field office and too complicated to handle by video conference. Similarly, at times semiconductor-based solutions, such as cloud computing, must be implemented or optimized on-site for the equipment to achieve full capacity. After months of remote access to their overseas operations, it also is critical that executives are able to visit their facilities to evaluate and manage their ongoing operations. In the past month, several countries central to the global electronics supply chain have engaged in both formal and informal talks to ease travel restrictions on personnel from essential industries. China, for example, is negotiating fast-track travel protocols with countries throughout Asia and Europe. On May 1, China and South Korea formalized an agreement that has made significant accommodations for semiconductor industry personnel to travel between the two countries. Last week, China and Singapore reached a similar deal – planned to take effect in early June – prioritizing travel for both executives and technicians.Beyond China, several ad-hoc negotiations are underway involving countries as varied as Taiwan, Vietnam, South Korea, Thailand, Canada, Australia and New Zealand. Multilateral discussions are also afoot with the aim of setting up bubble travel zones featuring standard health and travel protocols within the country blocs. As these disparate agreements between individual countries or small blocs of countries take shape, however, they are likely to create divergent standards that may complicate efforts of global businesses to effectively service their operations and customers, even if such travel is and has been deemed essential.In March, when U.S. states and many governments around the world began implementing stay-at-home orders and closing non-essential business operations, SEMI immediately took a lead role advocating to ensure that that the entire microelectronics supply chain was deemed essential and able to continue operations. In the U.S., nearly every state followed SEMI’s recommendation to adhere to the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) guidelines that included semiconductor manufacturing and its supply chain as essential, or specifically highlighted semiconductor supply chains as essential. Overseas, SEMI advocacy worked to ensure the semiconductor supply chain was deemed essential in every key jurisdiction.The mobility of essential workers is critical to essential business operations in the electronics supply chain. Just as SEMI led the effort to ensure that critical electronics supply chain operations were deemed essential as economies were closing down, SEMI will continue to advocate for uniform essential travel guidelines for critical infrastructure workers as economies reopen. Karl Kailing is manager of Public Policy and Advocacy at SEMI.

In an important step toward resuming business as usual in Japan, Prime Minister Shinzo Abe on May 14 lifted the state of emergency originally scheduled to expire at the end of May for 39 of Japan’s 47 prefectures, marking “the real beginning of our efforts toward a new normal in the era of the coronavirus” as new cases continue to decline. But with Tokyo, Osaka and six other prefectures still under the state of emergency, Abe urged citizens to remain cautious as the nation and world continue to confront the COVID-19 threat. Among criteria the remaining prefectures must meet for a state of emergency suspension is a reduction in new infections to no more than 0.5 cases weekly for every 100,000 citizens. The eight prefectures account for nearly half of Japan’s population and GDP, with Tokyo and Osaka the two largest urban areas in the island nation. Japan expects to contain its economic losses to 38 trillion yen, 15 percent less than the 45 trillion yen hit originally projected. The Japan government has planned a May 21 progress review[1] in the eight prefectures, a timeline that Abe said could lead to the lifting of the state of emergency before the original cutoff at the end of the month, a move that would help stem the drain on the domestic economy.Strict Immigration Controls Restricts International Travel to and from Japan by Supplier EngineersAs I reported on April 21, the Japan Foreign Ministry on March 31 raised its travel advisory to level 3 for 49 regions around the world including the U.S., prohibiting travel from Japan for any purpose. SEMI Japan is urging government officials to exempt Japanese supply chain engineers from the travel ban to allow visits to semiconductor manufacturing facilities in those regions in order to install, start up and service equipment.Starting May 14, Japan blocked immigration of foreign nationals and permanent residents from 100 countries and regions worldwide, a ban applying to anyone who spent time in their home region within 14 days of their planned arrival in Japan. The areas include China, Singapore, South Korea, and Taiwan in Asia; Canada and the U.S.; and Germany, France, Italy, Netherlands, Switzerland and the U.K. in Europe. For the complete list, see the Japan Ministry of Justice’s website.Japan’s immigration ban mirrors restrictions now in place in many other regions around the world. The immigration controls are well-intended – to restrict the spread of COVID-19 – but hamstring the global microelectronics supply chain. For example, the curbs bar engineers from international travel to install new tools and software in fabs. SEMI Japan has stressed the potential chip industry impacts of the ban in ongoing talks with the Ministry of Economy, Trade and Industry and is facilitating discussions between government representatives and SEMI members to help clear the way for travel by critical supply chain workers to Japan. SEMI Supports Members with COVID-19 ResourcesSEMI international headquarters and regional offices are here to help you, our members. For more information on our webinars, surveys, best practices and other information designed to help you meet the challenges of the pandemic, please visit the SEMI Coronavirus Updates Resources page.[1] The May 21 review found three prefectures in western area – Hyogo, Kyoto and Osaka – met the criteria to lift the state of the emergency. Four other prefectures – Chiba, Hokkaido, Saitama and Tokyo – remain under the emergency order that will be reviewed again as early as May 25.Jim Hamajima is president of SEMI Japan.

Japan’s Prime Minister Shinzo Abe declared a state of emergency for Tokyo, Osaka and five other prefectures[1] on April 7 in response to a startling increase of COVID-19 infections in the region’s cities in an uneasy moment for its domestic semiconductor industry. The declaration, effective through May 6, authorized the six prefectural governors to strengthen curbs on the spread of the virus and included guidance for citizens to stay home and restrictions on operations of non-essential businesses.With Japan supplying some 40 percent of the world’s chip production equipment and materials, the declaration stirred fears among semiconductor manufacturers that their uninterrupted operations – critical to sustaining the global industry – might be at risk. Japan Government Designates Semiconductor Industry as EssentialIn April 7 and 11 revisions to its Basic Policies for Novel Coronavirus Disease Control, the Japanese government allayed those concerns by designating semiconductor manufacturers essential businesses – a stark acknowledgment of the chipmakers’ vital role in combatting the novel coronavirus. The policy stated:“Among medical and manufacturing industries, we request the continuation of the following business operators in consideration of infection prevention: operators who are difficult to stop production line due to the characteristics of the equipment (such as blast furnaces and semiconductor factories); and operators who produce essentials (including important items in supply chains) for protection of the people who need medical care and support, as well as for maintenance of social infrastructure. We also request the continuation of the business operators who sustain medical care, the lives of the people, and maintenance of the national economy.”[2]SEMI Japan Reaches Out to Prefectures to Urge Essential Business Designation Equipment and materials shortages can halt production of an entire fab line and ripple through intricately connected global supply chains to stifle the production of end devices including the electronics critical to COVID-19 treatments. Electronic devices also play a central role in containing the virus’s spread by enabling artificial intelligence (AI), data analytics, digital communications, telemedicine, robotics, remote health monitoring, telecommuting, online shopping and other digital services.The essential business designation was explicit recognition that Japan’s semiconductor supply chain is integral to the global chip production ecosystem and worthy of the same protections the government has implemented for semiconductor companies. With SEMI members operating in Japan’s 47 prefectures, I sent letters to all prefectural governors three days after the second policy revision, urging them to apply the same designation, and the SEMI Japan team is following up to secure their support.SEMI Japan Encourages Government to Exempt Members from Travel Restrictions The Japan Foreign Ministry on March 31 raised to level 3 its travel advisory for 49 regions including the U.S., China, Taiwan and South Korea, encouraging Japanese citizens to avoid travel regardless of purpose to blunt the international spread of the coronavirus. SEMI Japan is working with the Semiconductor Equipment Association of Japan to urge the government to exempt semiconductor supply chain companies from the level 3 travel restrictions if they implement measures to prevent domestic infections and contagion in the visited regions. The exemptions would allow supply chain companies to install and service equipment at fabs – one key to maintaining smooth, uninterrupted operations.SEMI Supports Members with COVID-19 ResourcesSEMI international headquarters and regional offices are here to help you, our members. For more information on our webinars, surveys, best practices and other information designed to help you meet the challenges of the pandemic, please visit the SEMI Coronavirus Updates Resources page.[1] The six prefectures are Tokyo, Kanagawa, Chiba, Saitama, Osaka, Hyogo and Fukuoka.[2] Provisional translation by Ministry of Health, Labour and Welfare. Full document is available at https://www.mhlw.go.jp/content/10900000/000620733.pdf.Jim Hamajima is president of SEMI Japan.

Today, the U.S. Trade Representative (USTR), as part of its Section 301 investigation into China's trade practices, released a list of approximately $300 billion worth of Chinese goods, including a number in the semiconductor supply chain, that would face a tariff of up to a 25 percent. SEMI is working with members to assess the industry impact and will submit written comments and testify against the tariffs at a public hearing scheduled for mid-June.SEMI encourages members to review the new list and determine the level, if any, of impact.Today’s announcement follows last Friday’s tariff hike from 10 percent to 25 percent on $200 billion of imports from China. All told, the U.S. already has levied tariffs on $250 billion of Chinese goods that include materials and machines critical to semiconductor manufacturing. The expanded list released Monday would impose tariffs on essentially all imports from China. For its part, China has announced retaliatory tariffs, but more are likely coming.SEMI has been steadfast in its opposition to these tariffs and other barriers to global commerce. Over the past year, SEMI has submitted numerous written comments and offered testimony on the damaging impact of tariffs to the semiconductor industry. While SEMI strongly supports efforts to strengthen intellectual property protections, we believe that the tariff increases will do nothing to address concerns over China’s trade practices but, instead, harm companies in the semiconductor supply chain by increasing business costs, introducing uncertainty and stifling innovation.SEMI will continue tracking ongoing trade developments. SEMI members with questions should contact Jay Chittooran, global public policy manager at SEMI, at [email protected].

Yesterday, President Trump extended the deadline for List 3, which would have raised U.S. tariffs on $200 billion worth of goods from China. SEMI welcomes the deadline extension.Over the past three months, the United States and China have engaged in bilateral discussions to address structural issues like intellectual property protection and requirements for the use of joint ventures as well as trade balance concerns. President Trump announced that these talks have yielded significant and substantial progress in all areas. That said, it’s been reported that discussions on structural issues, such as forced technology transfer, have seen limited progress.Certainly, questions remain on the specifics of liberalization, the structure of the agreement and, most notably, enforcement. Any new commitment will be toothless without a firm and binding enforcement mechanism. While the date of the new deadline hasn’t been clarified, we believe that the tariffs won’t be increased before Presidents Trump and Xi meet, which could happen in late March at Mar-a-Lago.List 3 covers a range of items, including a number of consumer goods, but also directly impacts items critical to the semiconductor manufacturing process, including materials and machines. SEMI estimates that all U.S. and Chinese retaliatory tariffs – which hit machines and tools central to the semiconductor industry, including equipment used to manufacture wafers, boules, and chips as well as test, inspection and sensing equipment – will cost members more than $700 million in annual duties.While SEMI strongly supports stronger protections for valuable intellectual property (IP), tariffs will not help address Chinese trade practices and will ultimately have significant and unintended consequences. SEMI asserts that these tariffs will harm companies in the semiconductor supply chain by increasing business costs, introducing uncertainty, and stifling innovation. The tariffs seem to target U.S. firms for simply operating in China.Given that chips, tools, and materials are extremely complex, precise, and difficult to manufacture, it is not reasonable to believe that any component can easily be replaced with a part from another source. Further, this U.S. government approach does not take into account that many items subject to these tariffs are not available, at sufficient quality and cost, from domestic sources, or even non-Chinese sources. We stand steadfast in our belief that this trade action will raise prices, put thousands of high-paying and high skill jobs at risk, and curb growth.SEMI will continue monitoring new developments in this area. Any SEMI members with questions should contact Jay Chittooran, Global Public Policy Manager at SEMI, at [email protected].

The more than 53,000 people who flocked to SEMICON Korea last month were treated to a motherlode of insight into the future of the semiconductor industry as 470 companies exhibited innovative technologies in more than 2,000 booths. But the annual event’s most arresting numbers came in keynotes and other presentations pointing to the extraordinary industry growth that lies ahead.“It is no exaggeration to say that 90 percent of the world’s data has been generated in the last few years,” said Jim Feldhan, president of Semico Research. “This explosive growth of data is expected to continue. That's why server shipments will grow by 20.3 percent, or 30 million units, this year alone.”Feldhan said that the Internet of Things (IoT) will be a chief driver of semiconductor industry growth, with IoT expected to be applied in areas as varied as automotive, smart cities, edge computers, finance, architecture, agriculture and healthcare. For its part, artificial intelligence (AI) will start to exercise human-like judgment. Feldhan noted that in many instances in these fields, “it is more accurate to apply AI and vision systems than to rely on traditional decision-making.”Yoon Jong Lee, senior vice president of DB HiTek, predicted that the Internet, AI and 5G will drive market growth. “Looking back over the past 30 years, semiconductor market growth was powered by PCs, the Internet and cell phones, yet last year memory accounted for 35 percent of total semiconductor sales, more than double the figure in 2016,” he said. He predicted that, in 2019, the foundry sector will outstrip the semiconductor market in growth, noting that the average growth rate of the semiconductor industry is expected to be 4.1 percent, compared to 7.1 percent for the foundry market. Clark Tseng, director of SEMI, reported that the strong semiconductor growth in 2018 is unlikely to continue in 2019 due to the decline in memory pricing, as well as mobile and PC demand. “Demand for semiconductors is likely to decline in the first half as the industry is still digesting inventory and rebound in the second,” Tseng said. Semiconductor industry growth headwinds include decreases in high-end smartphone purchases, PC demand and demand for DRAMs for servers in data centers, Tseng said. Declines in economic growth and consumption in China and the U.S.-China trade war will also contribute to a slowdown. However, Tseng noted that, over the long term, technology innovation will continue and that the semiconductor industry’s prospects remain bright.One key innovation will be the elimination of AI’s reliance on Internet connections in the future. In his opening day keynote, Eunsoo Shim, senior vice president at Samsung Electronics, emphasized that AI technology that operates without the Internet in the future is essential. “We are developing 'on-device AI' technology that incorporates AI algorithms in products such as smartphones and autonomous vehicles,” he said. "When on-device AI technology is implemented, it reduces reliance on the Internet, battery consumption, and data latency.” Reducing latency will significantly improve device response time.Walden C. Rhines, CEO Emeritus of Mentor, a Siemens business, predicted that AI will fuel rapid memory growth. The memory semiconductor (DRAM, NAND flash) market is expected to see a temporary slowdown this year, with the market expected to rebound in 2020. Rhines said that memory could be seen as an early market with rapid future growth, citing memory market super-booms in 1995 and 2000.“Memory production has not decreased since 1995 or 2000,” he said. “Although memory prices will temporarily fall this year after significant market growth in 2017 to 2018, the market will continue to grow as memory production increases,” he said. Rhines added that “although memory prices will drop by about 10 percent this year, he believes prices will increase 6 percent next year.” He also predicted the steady growth of the non-memory semiconductor market as AI technology matures and China’s investment in fabless companies continues.Indeed, SEMICON Korea speakers made it clear that concerns about the growth of the semiconductor industry are expected to be short-lived. While overall growth is likely to slow in 2019, the industry is expected to rebound steadily – powered by the semiconductor industry paradigm shift led by AI, IOT, and autonomous driving – and reach a new high of nearly $541 billion in 2020.Jaegwan Shim is a marketing specialist at SEMI Korea.

Last year the industry posted another remarkable double-digit revenue growth year. IC shipments eclipsed one trillion units for the first time and continued to enable an ever-expanding array of silicon intensive-applications.2018 was also a pivotal year of transformation at SEMI. Setting our sights firmly on building more value for SEMI members, we doubled down on priorities I established this time last year. We advocated intensively on global trade policies, industry talent needs, and critical environment, health and safety (EHS) concerns. To underpin our efforts around talent, we took the bold step to reinvigorate the industry’s identity with a dynamic image campaign. Above all, we targeted critical industry-wide issues to help us realize the ambition of becoming a trillion-dollar industry in the next decade. Workforce DevelopmentRedefining our approach to talent development in 2018 was and remains a top priority. A diverse, highly skilled workforce is crucial to the industry’s ability to innovate. Last year we ramped up a number of SEMI High Tech U (HTU) programs to inspire young people and attract them to careers in high-tech manufacturing. To date, more than 130,000 students have been touched by HTU – through student or teacher programs.Over the past year, we designed a new university outreach program and established partnerships with 100 institutions. We established Workforce Pavilions at SEMICON events in Southeast Asia, the U.S., Taiwan, Europe and Japan for students to explore career opportunities and meet with recruiters. We thrilled at seeing sponsors hire young talent at SEMI events. This year, all SEMICONs worldwide will feature Workforce Pavilions.SEMI also formalized its commitment to Diversity and Inclusion (D I) with the establishment of a D I council to shape new programs including the recently launched Spotlight on SEMI Women. To localize and fully optimize our D I programs, we established regional workforce councils in every region we serve. We unveiled the SEMI Mentoring Program to support students and young professionals on this journey by facilitating one-on-one mentoring relationships with industry professionals. Hundreds of mentees have enrolled. But we still need more mentors. I urge you to join the program. During the year, SEMI also expanded its workforce staff and developed a comprehensive workforce strategy with programs that engage students as early as elementary school and inspires them through high school and college. The program provides pathways to professional careers, building a pipeline to fill the short-term and long-term talent needs of the industry. Industry Image CampaignAs we developed the comprehensive workforce development program, we knew we had to refresh the industry’s image and appeal to the next generation through contemporary media and communications channels. So we recently launched a bold, innovative campaign to raise industry awareness and attract students and recent graduates to careers in semiconductor manufacturing.Our You’re Welcome campaign is a novel, creative approach that blends entertainment, media and storytelling to excite students about the industry. The campaign went viral immediately and within weeks had more than 5.5 million social media impressions and 2.3 million video views.Trade Policy AdvocacyRising trade tensions between the U.S. and China catapulted global trade policy to the forefront of industry concerns in 2018. Since the tariffs have taken force, semiconductor companies have faced higher costs, greater uncertainty, and difficulty selling products abroad. The tariffs have forced many SEMI member companies to pause or rethink their investment strategies.SEMI quickly engaged U.S. policymakers and provided resources for SEMI members. We formed a member trade task force, staged trade compliance seminars in China, and convened meetings with over 110 U.S. congressional, agency and administration officials, and provided testimony on the importance of the free trade to the industry.SEMI continues to educate policymakers about the critical importance of free and fair trade, open markets, and respect and enforcement of IP for all players in the global electronics manufacturing supply chain. As part of this initiative, we distributed “10 Principles for the Global Semiconductor Supply Chain in Modern Trade Agreements” and encouraged their adoption in various trade negotiations. These principles outline the primary considerations for balanced trade rules that benefit SEMI members around the world, strengthen innovation and perpetuate the societal benefits of affordable microelectronics.Environment, Health and SafetyEnvironmental regulations are proliferating globally even as advanced semiconductor manufacturing technology relies increasingly on a host of new materials. With dozens of new fabs and fab line upgrades, our industry must align on best practices, sensibly respond to materials restrictions, and renew efforts toward sustainable manufacturing.That’s why the revitalization of SEMI EHS efforts became another priority in 2018. Two months ago, we hosted the inaugural EHS Summit at SEMI Headquarters. Fully, 70 EHS professionals and company executives met to form the basis for the future SEMI EHS program.The Year AheadDespite a softening in the market, compounded by Apple’s first-ever announcement of a revenue decline in 16 years, a geopolitical whirlwind on trade and an extended shutdown of much of the U.S. government, the future is bright.At SEMI’s annual Industry Strategy Symposium (ISS 2019) in Half Moon Bay, Calif. in early January, the sense of optimism was palpable. In her keynote address, Dr. Ann Kelleher, Sr. VP and General Manager, Technology and Manufacturing Group, at Intel, observed that data is powering the fourth industry revolution and the expansion of compute. With customers expecting continual improvements in applications, Kelleher highlighted the tremendous opportunity for the chip industry to meet these expectations.At ISS 2019, we announced a Memorandum of Understand between SEMI and imec. The MOU will enable us to accelerate our members’ engagement in SEMI’s Smart vertical market platforms, in particular Smart MedTech and Smart Transportation. Our partnership with imec will also allow us to boost SEMI Standards activities in non-CMOS technologies, deepen technology roadmap efforts and augment our SEMI Think Tank initiative in thought leadership at a global level.Over the course of this coming year, will we begin our global rollout of key building blocks of our comprehensive workforce development program to engage schoolchildren as young as 10 and learners all the way to veterans who return to the workforce. We are now able, with the invaluable help of our Workforce Development Council and the passionate engagement of many SEMI member companies, to offer a solution to the talent crisis in our industry.We will continue to be the leading voice for our members and the end-to-end semiconductor supply chain across Talent, Trade, Tax and Technology as we work to ensure free, fair trade that protects IP while preserving vital access to markets to grow the supply chain. Vertical Market PlatformsOur vertical market platforms are an important part of this growth. For example, in Smart MedTech, SEMI looks forward to working with the Nano-Bio Materials Consortium to advance human monitoring technology for telemedicine and digital health after winning $7 million to fund the renewed program. In Smart Transportation, we will leverage the Global Automotive Advisory Council (GAAC) we formed last year to represent the full automotive supply chain and the Smart Transportation and Smart Automotive forums featured at all our SEMICON events to enable the industry to identify and seize opportunities in autonomous driving. At ISS 2019, Sujeet Chand of Rockwell Automation noted that “digitization will grow faster in the next 10 years than it did in the past 50,” a trend calling for semiconductor fab architectures that transform data into business value. We will continue to bring the industry together at our Smart Manufacturing venues to help uncover ways to deploy deep learning, edge computing and other Smart technologies to deliver this value and meet the challenges of automation as artificial intelligence’s (AI) sprawling influence reshapes industries including manufacturing.I am filled with optimism and thrilled about the opportunities I see on the horizon for our members as we build on our 2018 accomplishments to enable your prosperity in 2019 and beyond. My heartfelt thanks to all of you for your participation in our programs and events.I look forward to another successful year as we connect, collaborate and innovate together!Ajit Manocha is president and CEO of SEMI.

Meeting Attended by More than 100 Tech Company RepresentativesOver the past decade, China has become a central market for the semiconductor industry. China is now home to more than 30 percent of semiconductor end users worldwide. All semiconductor companies, regardless of size, operate in China. The rise of China’s semiconductor market has been enabled by global commerce and a vast network of supply chains that span the globe.With China now a prominent player in the industry, it has become critically important for semiconductor companies to effectively engage with China. In order to help our member companies better understand the challenges and opportunities and navigate what can be a complex landscape, SEMI hosts annual trade compliance conferences in China for trade professionals. This year, SEMI, with CompTIA and U.S. Information Technology Office (USITO), hosted two global trade seminars in China, one in Shanghai on October 30th and the other in Beijing on November 1st.Over 120 representatives from more than two dozen technology companies attended the 2018 trade compliance seminars. Over the course of the two sessions, speakers from government, business, and law firms highlighted the most pressing trade issues in China. Speakers included thought leaders, trade practitioners and senior Chinese government officials.Sessions included a deep dive on China’s draft customs reform law, a panel discussion on U.S. export controls, and a briefing on how best to engage with China Customs and how China’s products are classified. Another well-received session focused on the status of China’s export control law, which has been in the drafting process for years.However, the overarching question for many attendees was U.S.-China economic relations, which are undergoing a sea change, with the U.S. having imposed or threatened tariffs on all imports from China – totaling more than $500 billion in goods – over the past six months. As a speaker noted during a session on the U.S.-China tensions and the surrounding broader geopolitical impacts, the environment is becoming increasingly complex and volatile. In fact, on the morning of the first session, Fujian Jinhua Integrated Circuit was added to the U.S. Commerce Department’s entity list, which effectively restricts exports to the company.As a result of the trade actions, ranging from tariffs to enhanced export controls, U.S. semiconductor companies are beginning to increase prices, reduce research and development (R D) budgets, restructure supply chains and take other mitigation actions that will ultimately slow innovation. Certain export controls and other regulations that prohibit U.S.-companies from conducting business with targeted companies will put the U.S. at a competitive disadvantage.In fact and as we speak, some companies with China-based operations have cancelled orders from U.S. companies and shifted to suppliers that are not subject to U.S. actions to reduce the associated risks of supply interruption and cost increases. Ultimately, U.S. trade policy could backfire, threatening jobs, curbing growth, cutting U.S. R D investments and compromising the competitiveness of U.S. firms.SEMI will begin planning next year’s Global Trade Seminar in the coming months. If you would like to be involved in the planning, or would simply like more information about the seminar, please contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].

Last week, the Office of the U.S. Trade Representative (USTR), on instruction from President Trump, notified Congress that the administration intends to begin bilateral trade negotiations with Japan, the European Union (EU), and the United Kingdom.SEMI stands strong for free trade and open markets, and roundly supports efforts to increase market access and tap into more foreign economies, especially economies like Japan and the EU, both of which are central to the semiconductor industry. The semiconductor industry, which enables the $2 trillion electronics market, is built on global commerce. SEMI members rely on a vast network of supply chains that span the globe, bringing together components and tools made all around the world and assembled into a single sub-system that is then integrated into a larger tool used in the chipmaking process.These free trade agreements will reduce tariffs, which will result in cost savings and productivity gains, and allow SEMI members to expand and grow. But the benefits of modern free trade agreements extend well beyond tariff reduction. Indeed, these trade deals will establish and enhance global trade rules that enable companies to innovate and compete fairly on a level playing field. Trade agreements strengthen certainty and further business continuity.While the exact nature and negotiation timelines for the talks remain unclear, SEMI will engage the administration, urging it to maintain high standards in these agreements, such as: Maintain strong respect for intellectual property and trade secrets through robust safeguards and significant penalties for violators Remove tariffs and non-tariff barriers on semiconductor products as well as products that depend on semiconductors Simplify and harmonize the customs and trade facilitation processes Combat any attempts of forced technology transfer Prevent use of data localization measures and enable the free flow of cross-border data flows End discriminatory and/or burdensome regulatory practices Ensure standards in all forms are market-oriented Create rules for state-owned enterprises to ensure fair and non-discriminatory treatment of all companies According to Trade Promotion Authority (TPA), the U.S. law that guides trade votes in Congress, negotiations with each country can only begin 90 days after last week’s notification. During that period, there will be intensive consultation with Congress and stakeholders. This means, at the earliest, talks can start on January 14, 2019. (Bear in mind that discussions with the UK can only begin in earnest once the UK has formally left the European Union on March 29, 2019.)The Trump administration’s announcement comes after the U.S. imposed or threatened tariffs on imports on all trading partners, including the EU and China. All told, the U.S. has imposed tariffs on more than $300 billion worth of goods. SEMI has weighed in on the detrimental nature of tariffs, arguing that tariffs on China will ultimately do nothing to address the concerns with China’s trade practices. This sledgehammer approach will introduce significant uncertainty, impose greater costs, and potentially lead to a trade war, ultimately undercutting the ability of semiconductor companies to sell overseas, stifling innovation and curbing U.S. technological leadership.Elsewhere, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the multilateral trade deal that links 11 Asia-Pacific economies, is well on its way to taking force. Canada will be taking its final steps to ratify the deal, joining Mexico, Japan and Singapore. The deal, formerly known as the Trans-Pacific Partnership, should take effect by the first half of 2019.SEMI will continue tracking ongoing trade developments. Any SEMI members with questions should contact Jay Chittooran, Public Policy Manager at SEMI, at [email protected].