China is still years behind the U.S. despite Huawei’s breakthrough chips, Raimondo tells ’60 Minutes’
WASHINGTON, DC – JULY 25: U.S. Secretary of Commerce Gina Raimondo listens as U.S. President Joe Biden participates virtually in a meeting on the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, in the South Court Auditorium at the White House on July 25, 2022 in Washington, DC.
Anna Moneymaker | Getty Images News | Getty Images
Commerce Secretary Gina Raimondo on Sunday downplayed Huawei Technologies’ latest microchip breakthrough, arguing the U.S. remains far ahead of China in the critical technology.
The comments, made on CBS News’ “60 Minutes,” are in line with the Commerce secretary’s stance that the Biden administration’s restrictions on chip sales to China are working, despite an advanced made-in-China chip surfacing in a Huawei phone last year.
“It’s years behind what we have in the United States. We have the most sophisticated semiconductors in the world. China doesn’t. We’ve out-innovated China,” Raimondo said in the interview which aired Sunday evening in the U.S.
U.S.-blacklisted Huawei released the Mate 60 Pro smartphone in August, which sported a 5G-capable chip — a feat thought to have been made difficult by a series of U.S. export controls in late 2022. The phone launched while Raimondo was on a visit to China.
Prior to the trip, it was reported that Raimondo’s email had been accessed by Chinese-linked hackers.
“I have their attention, clearly,” she said, adding the U.S. would continue to pursue actions to protect U.S. national security and businesses.
According to a senior Commerce Department official, Huawei’s chipmaking partner SMIC “potentially” violated U.S. law by providing an advanced chip to the Chinese phone maker.
Since the release of the Mate 60 Pro, the U.S. has further tightened restrictions on sales of advanced semiconductor tech to China.
Chinese officials have repeatedly denounced the policies, which require licenses for any company worldwide to sell products with advanced U.S.-designed chip technology to countries seen as adversaries.
Many U.S. chip companies, which rely on China for a large amount of business, have also expressed concerns about losing market access.
“We want to trade with China on the vast majority of goods and services,” Raimondo said. “But on those technologies that affect our national security, no.”
The global chip race ramped up after Moscow’s invasion of Ukraine in 2022, triggering the U.S. and allies such as the Netherlands and Japan to tighten advanced tech export controls. CNBC previously reported that Russia acquired advanced Western technology through intermediary countries like China.
“It’s absolutely the case that our export controls have hurt [Russia’s] ability to conduct the war, made it harder,” Raimondo said, though she admitted that Russia has found some alternative sources of chips.
The Commerce Department has also overseen the allocation of the Biden administration’s almost $53 billion CHIPS Act, aimed at building the U.S. domestic semiconductor industry and undercutting rivals like China.
In recent weeks, billions in grants and loans have been earmarked for chipmakers Taiwan Semiconductor Manufacturing Co., Samsung Electronics and Micron Technology, which are all increasing production capacity in the U.S.
Raimondo told CNBC earlier this month that all of the grant money allocated for the CHIPS Act will be sent out by year-end.
Industrial and infrastructure stocks may soon share the spotlight with the artificial intelligence trade.
According to ETF Action’s Mike Atkins, there’s a bullish setup taking shape due to both policy and consumer trends. His prediction comes during a volatile month for Big Tech and AI stocks.
“You’re seeing kind of the old-school infrastructure, industrial products that have not done as well over the years,” the firm’s founding partner told CNBC’s “ETF Edge” this week. “But there’s a big drive… kind of away from globalization into this reshoring concept, and I think that has legs.”
Global X CEO Ryan O’Connor is also optimistic because the groups support the AI boom. His firm runs the Global X U.S. Infrastructure Development ETF (PAVE), which tracks companies involved in construction and industrial projects.
“Infrastructure is something that’s near and dear to our heart based off of PAVE, which is our largest ETF in the market,” said O’Connor in the same interview. “We think some of these reshoring efforts that you can get through some of these infrastructure places are an interesting one.”
The Global X’s infrastructure exchange-traded fund is up 16% so far this year, while the VanEck Semiconductor ETF (SMH), which includes AI bellwethers Nvidia, Taiwan Semiconductor and Broadcom, is up 42%, as of Friday’s close.
Both ETFs are lower so far this month — but Global X’s infrastructure ETF is performing better. Its top holdings, according to the firm’s website, are Howmet Aerospace, Quanta Services and Parker Hannifin.
Supporting the AI boom
He also sees electrification as a positive driver.
“All of the things that are going to be required for us to continue to support this AI boom, the electrification of the U.S. economy, is certainly one of them,” he said, noting the firm’s U.S. Electrification ETF (ZAP) gives investors exposure to them. The ETF is up almost 24% so far this year.
The Global X U.S. Electrification ETF is also performing a few percentage points better than the VanEck Semiconductor ETF for the month.
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