SEOUL, South Korea, Nov. 8, 2016 /PRNewswire/ -- U.S. Commerce Secretary Penny Pritzker has voiced concerns, stating that if the Chinese keep ploughing investment into their semiconductor sector, the global market for the products could become hugely distorted which may hamper innovation and lead to overcapacity.
Pritzker was heavily critical of an initiative by the Chinese authorities to balloon the share of Chinese-manufactured integrated circuits in their own market by around 60 percent over the next decade. The current share is only 10 percent.
"The whole ecosystem of innovation will be hugely undermined. This is blindingly obvious to anyone willing to take an unbiased view of the Chinese government's unwavering investments in a sector that simply doesn't need it," Pritzker said of the $160 billion plan on Thursday.
"We've already seen what over-investment like this can do. Just take a look at the steel industry for example. The government got involved and interfered with how the natural dynamics of the industry functions; now we have a glut on our hands. The same can be said for the green technology industry," she added.
Steel overproduction in the global marketplace has had serious ramifications in the U.S. as factories close and prices plummet due to lower demand. The strategy has also caused massive damage to the sector internationally.
"The Department of Commerce are understandably spooked as they don't want the same fate to happen to the semiconductor industry," said William Harper, Head of Global Mergers and Acquisitions at CTI China Renaissance in a phone interview for Bloomberg. "It's important they are seen to be taking steps to try and reach the Chinese government in order to stop history repeating itself. How much success they will get is another matter." The department has recently led a research investigation into the global semiconductor industry and will attempt to gather evidence that can be used to convince foreign governments that interference can have lasting damaging effects.
"We will have no qualms in making our feelings clear to the Chinese government that we will not accept this kind of policy which involves such a huge amount of unnecessary capital inflow to the semiconductor sector, it is completely unacceptable," Pritsker added.
+82 2 6410 8256
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cti-china-renaissance-comments-on-markets-becoming-distorted-with-continued-investment-by-china-300359142.html
SOURCE CTI China Renaissance