US Firms Investing in Chinese Chip Makers Despite Security Concerns
Various U.S.-based companies and their affiliates in China have continued to invest in the Chinese semiconductor industry despite reservations from the Biden administration about national security concerns, The Wall Street Journal reports.
The Biden administration is "looking at the impact of outbound U.S. investment flows that could circumvent the spirit of export controls or otherwise enhance the technological capacity of our competitors in ways that harm our national security," White House national security adviser Jake Sullivan said last July, according to the Journal.
Despite these concerns, the research firm Rhodium Group found that American companies and investors have made more than 50 investment deals involving the Chinese semiconductor industry over the course of three years, from 2017 to 2020. This includes Intel, which invested in the Chinese company Primarius Technologies Co. Other investors include the Silicon Valley venture capital firms Lightspeed Venture Partners, Sequoia Capital, Matrix Partners, and Redpoint Ventures, which have made over 60 investments in the country’s chip industry since the start of last year.
The newspaper notes that although the amounts invested have not been disclosed in most cases, the research shows that Chinese semiconductor startups have likely raised billions for investors.
"It’s a capital-intensive sector, and capital matters to picking the winners," Nathan Picarsic, one of the founders of the consulting firm Horizon Advisory, which has a focus on China, told the Journal.