A Review of Trump's Historical Semiconductor-related Policies and an Analysis of Their Impacts

I. The Inevitability of the Semiconductor and Industrial Conflicts between China and the United States

Semiconductors and their extended terminal industries, as crucial core basic industries in the United States, have seen the United States' strikes and prevention measures against its competitors never cease since their inception. Generally speaking, the United States has continuously expanded export control and sanction methods, further refining the applicable fields. While restricting its competitors, it has vigorously promoted the implementation of domestic industrial policies, increasing investment in the industry as well as in basic research and development. It has also restricted the flow of federal funds to its competitors and even conducted security reviews on the application of federal funds in the fields of science and investment. Its core aim is to suppress the development of its competitors' semiconductor industries, thereby maintaining its hegemony in the fields of scientific and industrial dominance.

Policy conflicts are hard to avoid. Starting from the Wassenaar Arrangement after the Cold War, Western countries led by the United States have continuously imposed sanctions and suppression actions on China's chip industry and related enterprises, reaching a "peak" during Trump's tenure in 2018. After the Biden administration took office, it has further strengthened the restrictive measures against China. If Trump embarks on a second term, the policy-level conflicts between China and the United States will still be inevitable.

Economic interests are the root cause. The number of people directly engaged in semiconductor design, manufacturing, testing, and research and development in the United States exceeds 345,000. The employment positions involved in the periphery of the industry exceed 2 million, and the radiation range of jobs in related downstream and peripheral industries can reach more than 26 million.

From a long-term perspective, according to the prediction of the Semiconductor Industry Association (SIA) of the United States, the share of the United States' semiconductor manufacturing industry in the global market has dropped sharply from 37% in 1990 to 12% in 2020 and is expected to decline to 10% by 2030. In sharp contrast, it is expected that the Chinese mainland will occupy a major share of the global semiconductor manufacturing industry by 2030.

Overall, the intertwined game and cooperation between China and the United States in the semiconductor and related industries will be a long-term and continuously escalating process. Trump's possible re-election might accelerate this process.

II. Trump's 1.0 Era Initiated the Reverse Globalization Process of the Semiconductor Industry Chain

Starting from April 2018, two major Chinese-funded enterprises, Huawei and ZTE, became the targets of sanctions by the United States government, facing restrictions on chip purchases and sales in the United States. In the same year, the Trump administration launched the controversial "China Initiative", which investigated Chinese-related scientific researchers and scholars, ostensibly to prevent industrial espionage activities. This initiative was widely criticized for racial discrimination and prejudice and was finally abolished during Biden's tenure in 2022. In August 2018, Trump signed the "Foreign Investment Risk Review Modernization Act of 2018 (FIMMRA)", strengthening the function of the Committee on Foreign Investment in the United States (CFIUS) to safeguard national security interests, resulting in the rejection of many Chinese enterprises' investment plans in the United States. At the end of Trump's previous term, the US Department of Commerce included SMIC and its subsidiaries in the trade blacklist, preventing them from obtaining the production capacity of advanced semiconductor technologies of 10 nanometers and below, thus opening a new stage of comprehensively curbing the development of China's chip industry.

III. If Trump Embarks on a 2.0 Term, His Semiconductor Restriction Policies against China Are Likely to Continue

Judging from his campaign policies, Trump plans to fully promote the "reflow" of the US semiconductor industry in various aspects such as finance, currency, industry, and trade, and the chip-related bills are one of the key areas he focuses on. As a result, the trend of China-US technological decoupling is highly likely to continue during Trump's second term. Since 2018, the US government has constructed a complete set of sanction systems to besiege and block Chinese technology from all fields. This situation will not change due to the change of presidents. In terms of specific implementation, the current President Biden prefers gradual high-level dialogues, while Trump is more enthusiastic about direct dialogues with President Xi. During this campaign period, Trump regarded technological innovation, especially the revival of the US high-tech manufacturing industry, as the key path to maintaining the leading edge over China, especially in the field of artificial intelligence. Meanwhile, he is "afraid" of the remarkable progress made by China in independent innovation in fields such as new energy (mainly photovoltaic, covering energy storage, etc.), and new energy vehicles. In the future, his containment measures against China's semiconductor industry and terminal fields such as AI, automobiles, and new energy are likely to continue to escalate.

Although Trump's policy propositions in this round may be tougher than those in his previous term, the anti-risk ability of the Chinese economy has been significantly enhanced. By the middle of 2024, China has successfully conquered 33 out of the 35 key core technologies listed by the Science and Technology Daily in 2018. In the current environment where global liquidity is tending to be loose, coupled with the continuous efforts of domestic new-quality productive forces and science and technology policies, Trump's taking office might become a booster for the accelerated development of China's semiconductor industry.