"If this accelerating shift in semiconductor manufacturing overseas continues, the U.S. will lose the ability to reliably obtain high-end semiconductor integrated circuits from trusted sources," Lieberman warned. He said Pentagon weapons systems, which increasingly use leading-edge semiconductors, could be endangered by the growing dependence on overseas production.

Lieberman, a ranking member of the Senate Armed Services committee, asked the Defense Department to submit a report on how to deal with the growing loss of U.S. chip production.

He proposed enforcing World Trade Organization rules on China against uneven value-added taxes imposed on chips imported into that country. He also said the Pentagon should survey all chip technologies that the Chinese government might be illegally subsidizing and seek remedial action. Lieberman also pushed for increased tax incentives for semiconductor investment in the United States and federal R&D funds for chip development.

George Scalise, president of the Semiconductor Industry Association, San Jose, favored most of Lieberman's proposals. He said U.S. chip manufacturing remains strong and accounts for 40% of global production. However, Scalise said that is likely to erode in the future since only a third of all new equipment orders are going into U.S.-based fabs.

By: DocMemory
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