Big news! The US bill has been enacted, will 3C sellers be hit hard?

Recently, the United States signed the Chips and Science Act (hereinafter referred to as the "Act"), which has brought a lot of uncertainty to the development of China's high-tech field and also affected the development of some cross-border companies.

The Act involves subsidies, tax incentives, grants, etc., with a total amount of $280 billion. The most noteworthy thing here is that the United States deliberately restricts investment in China, prohibiting companies that receive federal funding from significantly increasing production of advanced process chips in China for 10 years. Companies that violate the ban or fail to correct violations must return the relevant supplementary funds to the federal government in full, and the total amount of subsidies is as high as $52 billion.

Simply put, chip manufacturing companies that have received subsidies in the United States must manufacture chips domestically and are not allowed to invest and build factories in China. If they violate this rule, they will be subject to corresponding penalties.

The purpose is obvious. The US wants to reshape the industrial chain, supply chain, and value chain of the global chip industry to its own benefit, thereby suppressing the competitive momentum of China's chip industry.

Invest in the United States, R&D in the United States, and manufacturing in the United States. The implementation of this bill will undoubtedly have a major impact on the global chip industry, and its impact on cross-border e-commerce cannot be underestimated.

It is understood that my country is the world's largest semiconductor consumer, with chip demand accounting for 45% of the world's total, but more than 90% of chip consumption relies on imports. The United States has clearly pointed out that the purpose of promoting the implementation of the Act is to compete more strongly with China.

"Not only will it suppress China's chip industry, but it will also lock up China's high-end chips for 10 years." The bill restricts the investment of large semiconductor factories in China. Chips involve many upstream and downstream industrial chains, such as IGBT supply chain, MLCC supply chain, mobile phone touch screen industry chain, connector industry chain, LED chip supply chain, domestic sensor supply chain, battery industry chain, mobile phone camera industry chain, etc.

For cross-border sellers, many people believe that China's chip production capacity expansion used in many electronic products such as mobile phones and tablets, as well as the small household appliance industry, is likely to be constrained by this bill, but Xiaozhi disagrees.

We need to clarify the following points:

What the United States wants to lock down is China's high-end chip industry. We can still produce some chips with lower technical barriers, but in the short term the cost will increase, the quality will decrease, and the market acceptance will not be too high.

On the other hand, this is also a difficult problem that China is currently facing, but it also gives us an opportunity to do our best to overcome the problem and enhance our overall strength.

The Paper pointed out: " China's chip self-sufficiency rate is low and it relies on imports, so localization is imminent. In 2020, the self-sufficiency rate of local chips in mainland China was only 5.9%, and there is broad room for localization."

AVIC Securities said: "It is judged that the demand for domestic wafer fab expansion is still strong. At the same time, given the support of localization macroeconomic policies, the international situation, and the uncertainty of supply chain security, China's semiconductor industry chain will also strive to form a closed supply loop to prevent the recurrence of the "chip shortage wave". Therefore, domestic semiconductor equipment and semiconductor material manufacturers are expected to continue to have full orders."

With strong demand and rising costs, the industry that was not favored before has now become a hot commodity. More companies will invest manpower, material resources and financial resources to develop the entire chip industry. However, its future direction, success or failure, is still unknown for China.

Therefore, Chinese sellers only need to actively implement the corresponding policies issued by the country at that time, and there is no need to be too anxious and waste their own energy.

Rising product costs

The basic problem that exists in China now is that there are not many manufacturers that can meet the basic chip needs of various industries. Some companies that are doing well, such as BOE, are also subject to foreign control when it comes to core components. It is really difficult to complete them completely relying on internal strength.

We must face up to challenges when we encounter them. The demand is there, but resources are in short supply. During this window period, the production cost of products will definitely rise. Price determines the market competitive advantage. When our electronic products or small appliances sold overseas lose their price advantage, we need to take the brand route according to regional characteristics, because only brands can command a premium.

Product quality decline

Faced with the implementation of the US Chip Act, companies whose products' raw materials need support from the chip industry are facing great challenges. On the one hand, there is market consumer demand, and on the other hand, there is external production capacity supply. Raw materials determine the quality of products. Companies that lack financial strength can only settle for the second best and choose domestic supply chains, and product quality will inevitably be greatly affected.

Strong companies, such as Anker Innovations, have made it clear that for some core raw materials such as battery cells, the company will purchase them directly from world-renowned raw material manufacturers to ensure the reliability and safety of the company's overall product functions.

To some extent, small and medium-sized cross-border e-commerce companies are in a weak position.

Everything has two sides. Regarding the promulgation of the chip bill, some sellers believe that it is a coexistence of opportunities and challenges. We can clearly see what problems we will encounter, but what opportunities may arise behind this?

Chip industry upgrade

Some people believe that this is a good opportunity for the country to promote industrial upgrading, because with the implementation of the US chip4 (Quad) bill, many cost-effective multinational chips will be cut off, and domestic self-sufficient chips will become popular.

Difficulties force growth. By then, the upstream supply chain may have many unexpected product forms. Their appearance is only to adapt to the new market environment. At that time, it will be very important for merchants to judge the trend of market demand. Looking at the problem from a development perspective, there may be a new turn of events.

Entrepreneurship development direction

On one side, the other side is developing. We can clearly feel that since the United States began to blockade chips from China, people have shifted all their attention to this industry. The domestic chip industry will gradually enter a period of rapid development, and even a wave of entrepreneurship has emerged.

A large number of high-quality talents are pouring into this industry, and with the strong support of national policies, when all forces are helping an industry to develop, it will definitely have great potential. For cross-border enterprises, this is a development direction. From the supply chain to terminal sales, we can give full play to our ability to develop products, integrate and sell resources, and contribute to the development of an industry.

In conclusion:

Some people said: "The passage of this bill by the United States will certainly be condemned by the international community. This bill improperly interferes with and restricts economic, trade and investment cooperation among the global business community. The differentiated support policies will also distort the global semiconductor supply chain and disrupt the normal operation of international trade."