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    US Cracks Down on Chinese Companies for Security Concerns

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    The Biden administration placed severe restrictions on trade with dozens of Chinese entities, its latest step in a campaign to curtail access to technology with military applications.WASHINGTON — The Biden administration on Thursday stepped up its efforts to impede China’s development of advanced semiconductors, restricting another 36 companies and organizations from getting access to American technology.The action, announced by the Commerce Department, is the latest step in the administration’s campaign to clamp down on China’s access to technologies that could be used for military purposes and underscored how limiting the flow of technology to global rivals has become a prominent element of United States foreign policy.Administration officials say that China has increasingly blurred the lines between its military and civilian industries, prompting the United States to place restrictions on doing business with Chinese companies that may feed into Beijing’s military ambitions at a time of heightened geopolitical tensions, especially over Taiwan.In October, the administration announced sweeping limits on semiconductor exports to China, both from companies within the United States and in other countries that use American technology to make those products. It has also placed strict limits on technology exports to Russia in response to Moscow’s invasion of Ukraine.“Today we are building on the actions we took in October to protect U.S. national security by severely restricting the PRC’s ability to leverage artificial intelligence, advanced computing, and other powerful, commercially available technologies for military modernization and human rights abuses,” Alan Estevez, the under secretary of commerce for industry and security, said in a statement, referring to the People’s Republic of China.Among the most notable companies added to the list is Yangtze Memory Technologies Corporation, a company that was said to be in talks with Apple to potentially supply components for the iPhone 14.Congress has been preparing legislation that would prevent the U.S. government from purchasing or using semiconductors made by Y.M.T.C. and two other Chinese chip makers, Semiconductor Manufacturing International Corporation and ChangXin Memory Technologies, because of their reported links to Chinese state security and intelligence organizations.The Biden PresidencyHere’s where the president stands after the midterm elections.A New Primary Calendar: President Biden’s push to reorder the early presidential nominating states is likely to reward candidates who connect with the party’s most loyal voters.A Defining Issue: The shape of Russia’s war in Ukraine, and its effects on global markets, in the months and years to come could determine Mr. Biden’s political fate.Beating the Odds: Mr. Biden had the best midterms of any president in 20 years, but he still faces the sobering reality of a Republican-controlled House for the next two years.2024 Questions: Mr. Biden feels buoyant after the better-than-expected midterms, but as he turns 80, he confronts a decision on whether to run again that has some Democrats uncomfortable.The U.S. government added the companies to a so-called entity list that will severely restrict their access to certain products, software and technologies. The targeted companies are producers and sellers of technologies that could pose a significant security risk to the United States, like advanced chips that are used to power artificial intelligence and hypersonic weapons, and components for Iranian drones and ballistic missiles, the Commerce Department said.In an emailed statement, Liu Pengyu, the spokesman for the Chinese embassy in Washington, said that the United States “has been stretching the concept of national security, abusing export control measures, engaging in discriminatory and unfair treatment against enterprises of other countries, and politicizing and weaponizing economic and sci-tech issues. This is blatant economic coercion and bullying in the field of technology.”“China will resolutely safeguard the lawful rights and interests of Chinese companies and institutions,” he added.On Monday, China filed a formal challenge to the Biden administration’s chip controls at the World Trade Organization, criticizing the restrictions as a form of “trade protectionism.”The administration said that some companies, including Y.M.T.C. and its Japanese subsidiary, were added to the list because they posed a significant risk of transferring sensitive items to other companies sanctioned by the U.S. government, including Huawei Technologies and Hikvision.The Commerce Department said that another entity, Tianjin Tiandi Weiye Technologies, was added for its role in aiding China’s campaign of repression and surveillance of Uyghurs and other Muslim minority groups in the Xinjiang region of China, as well as providing U.S. products to Iran’s Islamic Revolutionary Guards Corps. U.S.-based firms will now be forbidden from shipping products to these companies without first obtaining a special license.Twenty-three of the entities — in particular, those supplying advanced chips used for artificial intelligence with close ties to the Chinese military and defense industry, and two Chinese companies that were found to be supporting the Russian military — were hit with even tougher restrictions.The companies will be subject to what is known as the foreign direct product rule, which will cut them off from buying products made anywhere in the world with the use of American technology or software, which would encompass most global technology companies.The administration also said it would lift restrictions on some companies that had successfully undergone U.S. government checks that ensured their products weren’t being used for purposes that the government deemed harmful to national security.As part of the restrictions unveiled in October, the Biden administration placed dozens of Chinese firms on a watch list that required them to work with the U.S. government to verify that their products were not being used for activities that would pose a security risk to the United States.A total of 25 entities completed those checks, in cooperation with the Chinese government, and thus have been removed from the list. Nine Russian parties that were unable to clear those checks were added to the entity list, the department said.A spokesperson for the Commerce Department said that the actions demonstrated that the United States would defend its national security but also stood ready to work in cooperation with companies and host governments to ensure compliance with U.S. export controls.In a separate announcement Thursday morning, a government board that oversees the audits of companies listed on stock exchanges to protect the interests of investors said that it had gained complete access for the first time in its history to inspect accounting firms headquartered in mainland China and Hong Kong.The agency, called the Public Company Accounting Oversight Board, said this was just an initial step in ensuring that Chinese companies are safe for U.S. investors. But the development marked a step toward a potential resolution of a yearslong standoff between the United States and China over financial checks into public companies. It also appeared to decrease the likelihood that major Chinese companies will be automatically delisted from U.S. exchanges in the years to come.Congress passed a law in 2020 that would have required Chinese companies to delist from U.S. stock exchanges if U.S. regulators were not able to inspect their audit reports for three consecutive years.Erica Y. Williams, the chair of the board, said the announcement should not be misconstrued as a “clean bill of health” for firms in China. Her staff had identified numerous potential deficiencies with the firms they inspected, she said, though that was not an unexpected outcome in a jurisdiction being examined for the first time.“I want to be clear: this is the beginning of our work to inspect and investigate firms in China, not the end,” Ms. Williams said. More

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    Biden Devotes $36 Billion to Save Union Workers’ Pensions

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    The money comes from last year’s Covid-19 relief package and will avert cuts of up to 60 percent in pensions for 350,000 Teamster truck drivers, warehouse and construction workers and food processors.WASHINGTON — President Biden announced Thursday that he was investing $36 billion in federal funds to save the pensions of more than 350,000 union workers and retirees, a demonstration of commitment to labor just a week after a rupture over an imposed settlement of a threatened rail strike.Mr. Biden gathered top union leaders at the White House to make the commitment, described by the White House as the largest ever award of federal financial support for worker and retiree pension security. The money, coming from last year’s Covid-19 relief package, will avert cuts of up to 60 percent in pensions for Teamster truck drivers, warehouse workers, construction workers and food processors, mainly in the Midwest.“Thanks to today’s announcement, hundreds of thousands of Americans can feel that sense of dignity again knowing that they’ve provided for their families and their future, and it’s secure,” Mr. Biden said, joined by Sean M. O’Brien, president of the Teamsters, and Liz Shuler, president of the A.F.L.-C.I.O., as well as Marty Walsh, the U.S. secretary of labor.The Biden PresidencyHere’s where the president stands after the midterm elections.A New Primary Calendar: President Biden’s push to reorder the early presidential nominating states is likely to reward candidates who connect with the party’s most loyal voters.A Defining Issue: The shape of Russia’s war in Ukraine, and its effects on global markets, in the months and years to come could determine Mr. Biden’s political fate.Beating the Odds: Mr. Biden had the best midterms of any president in 20 years, but he still faces the sobering reality of a Republican-controlled House for the next two years.2024 Questions: Mr. Biden feels buoyant after the better-than-expected midterms, but as he turns 80, he confronts a decision on whether to run again that has some Democrats uncomfortable.The pension investment came just a week after Mr. Biden prodded Congress to pass legislation forcing a settlement in a long-running dispute between rail companies and workers, heading off a strike that could have upended the economy just before the holidays. While the agreement included wage increases, schedule flexibility and an additional paid day off, several rail unions had rejected it because it lacked paid sick leave. A move to add seven days of paid sick leave failed in Congress before Mr. Biden signed the bill.The showdown over the rail settlement left Mr. Biden in the awkward position of forcing a deal over the objections of some union members even though he had promised to be the “the most pro-union president you’ve ever seen.” The pension rescue plan announced on Thursday put him back in the more comfortable stance of allying himself with organized labor, a key constituency of the Democratic Party.The $36 billion, drawn from the $1.9 trillion American Rescue Plan passed last year, will go to the Central States Pension Fund, which is largely made up of Teamster workers and retirees. The fund has been the largest financially distressed multi-employer pension plan in the nation. As a result of shortfalls, pensioners were facing 60 percent cuts over the next few years, but the White House said the federal funding will now ensure full benefits through 2051.Many of the affected workers and retirees are clustered in Midwestern states that have been battlegrounds in recent elections, including Michigan, Ohio, Wisconsin and Minnesota as well as other states like Missouri, Illinois, Florida and Texas.In his remarks, Mr. Biden expressed sympathy for workers and retirees facing cuts not of their own making. “For 30, 40, 50 years you work hard every single day to provide for your family. You do everything right,” he said. “But then imagine losing half of that pension or more through no fault of your own. You did your part. You paid in. Imagine what it does financially to your peace of mind, to your dignity.”Mr. O’Brien hailed Mr. Biden’s move. “Our members chose to forgo raises and other benefits for a prosperous retirement, and they deserve to enjoy the security and stability that all of them worked so hard to earn,” he said in a statement. While much of public policy is determined by big corporations, “it’s good to see elected officials stand up for working families for once.”Republicans called it a politically inspired payoff. Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, dubbed the rescue plan “the largest private pension bailout in American history,” saying it rewarded those who mismanaged their pensions.“Despite years of bipartisan negotiations and recommendations, Democrats rejected protections for union workers in other underfunded multi-employer plans that are not as politically connected as the Teamsters’ Central States plan,” Mr. Brady said. “Now, American taxpayers are being forced to cover promises that pension trustees never should have been allowed to make.” More

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    David Lipton, Economic Diplomat, Will Step Down From Treasury

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    Mr. Lipton, who served in senior roles in the Clinton and Obama administrations and at the I.M.F., is retiring.WASHINGTON — David A. Lipton, a longtime figure in the field of international economics, is stepping down on Wednesday from his job as international affairs counselor to Treasury Secretary Janet L. Yellen, according to two Treasury Department officials familiar with his plans.Mr. Lipton, one of Ms. Yellen’s closest aides, is departing at a critical moment for the global economy. He has become a key negotiator in some of Ms. Yellen’s biggest policy issues. He was deeply involved in international discussions about a global minimum tax last year and has been at the center of the talks among the Group of 7 nations to impose a cap on the price of Russian oil.An economist by training with a doctoral degree from Harvard, Mr. Lipton, 69, has held senior economic policymaking positions in the Clinton, Obama and Biden administrations. He was also a top official at the International Monetary Fund, where he served as the deputy managing director.Last year, Ms. Yellen recruited Mr. Lipton to return to the federal government to help steer the Treasury Department’s international portfolio while President Biden’s nominees to lead the international affairs division were awaiting Senate confirmation.In a statement, Ms. Yellen described Mr. Lipton as one of her closest advisers and lauded his career.The Biden PresidencyHere’s where the president stands after the midterm elections.Beating the Odds: President Biden had the best midterms of any president in 20 years, but he still faces the sobering reality of a Republican-controlled House.2024 Questions: Mr. Biden feels buoyant after the better-than-expected midterms, but as he turns 80, he confronts a decision on whether to run again that has some Democrats uncomfortable.The ‘Trump Project’: With Donald J. Trump’s announcement that he is officially running for president again, Mr. Biden and his advisers are planning to go on the offensive.Legislative Agenda: The Times analyzed every detail of Mr. Biden’s major legislative victories and his foiled ambitions. Here’s what we found.“He will be irreplaceable for the department, but I feel incredibly fortunate to have had his counsel in my first two years,” Ms. Yellen said. “During that time, David has helped shape our international agenda across a wide set of challenges — from the recovery from the pandemic to our response to Russia’s war against Ukraine.”Mr. Lipton first met Ms. Yellen while a graduate student at Harvard, where he took her introductory course in macroeconomics. Lawrence H. Summers, who would serve as Treasury secretary during the Clinton administration, was also in the class, and he and Mr. Lipton became friends.After graduating from Harvard with a Ph.D. in economics in 1982, Mr. Lipton joined the I.M.F., where he worked for eight years on assignments that involved stabilizing the economies of poor countries.In 1993, after a stint working with the economist Jeffrey D. Sachs advising Russia, Poland and Slovenia on their transitions to capitalism, Mr. Lipton joined the Clinton administration’s Treasury Department. He was recruited by Mr. Summers, who was then the deputy Treasury secretary under Robert E. Rubin. He initially focused on Eastern Europe and the former Soviet Union before turning his attention to easing turmoil stemming from the Asian financial crisis in 1997.While President George W. Bush was in office, Mr. Lipton worked at Citigroup and at the hedge fund Moore Capital Management. He joined the Obama administration as an economic adviser. In 2011, Christine Lagarde named him her top deputy at the I.M.F. when the fund was spending billions of dollars to prop up Greece’s economy and as the economic tension between the United States and China was intensifying.Mr. Lipton’s second term at the monetary fund was cut short in 2020 when Kristalina Georgieva reshuffled its senior leadership. His position at the fund, which is usually decided by the United States, was filled by Geoffrey Okamoto, a former Trump administration official.A longtime proponent of the benefits of a global economy and multilateralism, Ms. Yellen persuaded Mr. Lipton to join her team as the Biden administration sought to mend international relationships that had been frayed during the Trump era.“David Lipton has been an insufficiently sung hero of the international financial system for the last 30 years,” Mr. Summers said in a text message. “His quiet strength and wisdom both prevented and resolved numerous crises.”Mr. Lipton, who grew up in Wayland, Mass., was a star wrestler in high school, serving as a co-captain for two years. At Harvard, he and Mr. Summers bonded over squash and economics.During remarks introducing Mr. Lipton at the Peterson Institute for International Economics in 2016, Mr. Summers described his former classmate as an economic “fireman in chief” who maintained a “keep hope alive” attitude when economic diplomacy got tough.Known for a dry wit that belies his earnest demeanor, Mr. Lipton expressed appreciation for the high praise but recalled that when he met Mr. Summers on the first day of school he initially had his doubts.“After talking to Larry for about 15 minutes, my reaction was, ‘If they’re all like that, I’m really in trouble,’” Mr. Lipton joked. More

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    Leaders in Congress Say They Will Act to Prevent Rail Strike

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    Democratic and Republican leaders prepared to intercede as President Biden warned the prospect of a December strike put the U.S. economy “at risk.”After a meeting with President Biden, Democratic and Republican leaders pledged to pass legislation that would avert a planned nationwide rail strike in December.Doug Mills/The New York TimesWASHINGTON — Democratic and Republican leaders in Congress vowed on Tuesday to pass legislation averting a nationwide rail strike, saying they agreed with President Biden that a work stoppage during the holidays next month would disrupt shipping and deal a devastating blow to the nation’s economy.The rare bipartisan promise to act came as some of the nation’s largest business groups warned of dire consequences from a rail shutdown. Mr. Biden, who had promised to be the most pro-union president in the country’s history, said the federal government must short-circuit collective bargaining in this case for the good of the country as a whole.“It’s not an easy call, but I think we have to do it,” he told the top four lawmakers from both parties during a meeting at the White House on Tuesday morning, as the Dec. 9 strike deadline loomed. “The economy is at risk.”Speaker Nancy Pelosi said the House would vote Wednesday on a tentative agreement that Mr. Biden’s administration had helped negotiate between rail companies and the unions earlier this year. The agreement raised wages but lacked provisions for paid medical or family leave.Late Tuesday, facing substantial frustration among progressives who demanded that the offer include paid leave, Ms. Pelosi said she would also bring up a separate proposal to add seven days of paid sick leave to the agreement. It is unclear whether Republicans in the Senate would agree to such an addition, but the plan to hold a vote illustrated the degree of discontent among pro-union liberals about the agreement Mr. Biden had struck.“They demand the basic dignity of paid sick days. I stand with them,” Representative Alexandria Ocasio-Cortez, Democrat of New York, said on Twitter. “If Congress intervenes, it should be to have workers’ backs and secure their demands in legislation.”Senate leaders said they would work to pass legislation to avert the strike quickly after it passes the House, as expected. Senator Mitch McConnell of Kentucky, the minority leader, told reporters that “we’re going to need to pass a bill,” suggesting that Republicans did not intend to try to block such a move. Representative Kevin McCarthy of California, the House minority leader, said, “I think it will pass.”If it does, it will be bittersweet for Mr. Biden, who has built a decades-long political career by stressing his support for unions in their battles against management. Aides said the president had been reluctant to override the will of union workers, but ultimately changed his mind when three of his cabinet secretaries told him that negotiations had broken down and a strike seemed inevitable.Officials said Mr. Biden concluded that the effects of a strike, including hundreds of thousands of lost jobs, would be too damaging. Frozen train lines would snap supply chains for commodities like lumber, coal and chemicals, and delay deliveries of automobiles and other consumer goods, driving up prices even further.The American Trucking Associations, an industry group, recently estimated that relying on trucks to work around a rail stoppage would require more than 450,000 additional vehicles — a practical impossibility given the shortage of equipment and drivers.Understand the Railroad Labor TalksCard 1 of 5Averting a shutdown. More

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    Biden Spins His Economic Record Ahead of Elections

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    The president’s recent comments on Social Security, the deficit and economic growth claim credit where it is not always due.WASHINGTON — As President Biden and his administration have told it in recent months, America has the fastest-growing economy in the world, his student debt forgiveness program passed Congress by a vote or two, and Social Security benefits became more generous thanks to his leadership.None of that was accurate.The president, who has long been seen as embellishing the truth, has recently overstated his influence on the economy, or omitted key facts. This week, Mr. Biden praised himself for giving retirees a raise during a speech in Florida.“On my watch, for the first time in 10 years, seniors are getting an increase in their Social Security checks,” he declared. The problem: That increase was the result of an automatic cost-of-living increase prompted by the most rapid inflation in 40 years. Mr. Biden had not done anything to make retirees’ checks bigger — it was just a byproduct of the soaring inflation that the president has vowed to combat.In stops across the country in recent weeks, Mr. Biden has also credited himself with bringing down the federal budget deficit — the gap between what America owes and what it earns.“This year the deficit, under our leadership, is falling by $1.4 trillion,” he said last week in Syracuse, N.Y. “Ladies and gentlemen, the largest ever one-year cut in American history on the deficit.”Left unsaid was the fact that the deficit was so high in the first place because of pandemic relief spending, including a $1.9 trillion economic aid package the president pushed through Congress in 2021 and which was not renewed. Mr. Biden was in effect claiming credit for not passing another round of emergency assistance.White House officials contend that robust tax receipts, which helped reduce the deficit, are largely the result of strong economic growth that was supported by Mr. Biden’s economic policies.The State of the 2022 Midterm ElectionsElection Day is Tuesday, Nov. 8.Biden’s Speech: In a prime-time address, President Biden denounced Republicans who deny the legitimacy of elections, warning that the country’s democratic traditions are on the line.State Supreme Court Races: The traditionally overlooked contests have emerged this year as crucial battlefields in the struggle over the course of American democracy.Democrats’ Mounting Anxiety: Top Democratic officials are openly second-guessing their party’s pitch and tactics, saying Democrats have failed to unite around one central message.Social Security and Medicare: Republicans, eyeing a midterms victory, are floating changes to the safety net programs. Democrats have seized on the proposals to galvanize voters.It is common for presidents to spin economic numbers to improve their pitch to voters. Like many of his predecessors, Mr. Biden has emphasized economic indicators that are favorable to his record, including a low unemployment rate and the record pace of job growth in his first two years in office — a focus intended to win over an American public that remains deeply pessimistic about the economy, according to opinion polls.But as it gets closer to midterm elections that will determine the fate of the rest of Mr. Biden’s legislative agenda, the president’s cheerleading has increasingly grown to include exaggerations or misstatements about the economy and his policy record.White House officials have sometimes been forced to awkwardly correct Mr. Biden’s claims. Other times, they have doubled down on them.Senior administration officials acknowledged that some officials have unintentionally misspoken about the economy on occasion but denied that Mr. Biden or his administration had ever attempted to mislead the public about the economy. They said that his record requires no overstating.“The president’s economic agenda has given us an economy with historic job creation, faster declines in unemployment than prior recoveries, and private sector investments in new industries throughout the country,” Abdullah Hasan, a White House spokesman, said. “Where on occasion we have misspoken, as any human is allowed once in a while, we have acknowledged and corrected or clarified such honest mistakes.”Mr. Biden’s economic exaggerations generally pale in comparison to the tales spun by his predecessor, President Donald J. Trump. The former president, whose lies included insisting that he did not lose the 2020 election and that the Capitol was not attacked by his supporters on Jan. 6, 2021, regularly boasted of “the greatest economy in the history of the world” — a statement not based on any facts. Mr. Trump also said his giant tax cut package paid for itself when it did not, and he relied on outlandish economic growth projections to make his budgets balance.Jason Furman, an economist at Harvard University and a former Obama administration economic adviser, said some of Mr. Biden’s recent contentions appeared to be the types of “leaps of logic” that were common during election seasons. He pointed to the president’s claims of reducing the deficit and overseeing an increase in Social Security payments as examples.“This isn’t like making stuff up,” Mr. Furman said. “It’s just making a rather stretched and peculiar causal argument around true facts.”He added that Mr. Biden’s messaging bore no comparison to the falsehoods Mr. Trump used to tell about America being among the highest-taxed nations in the world, an inaccurate declaration given the far higher tax rates in countries such as France, Denmark and Belgium.“With President Trump, you had flat-out complete factual errors,” Mr. Furman said.Mr. Biden’s pitch has been centered on the notion that he is leading a post-pandemic transition to stable economic growth and that if Republicans take control of Congress, they will look to scale back social safety net programs, shut down the government and weaponize America’s need to borrow money to pay its financial obligations.But as the United States has struggled to contain inflation, the Biden administration has at times resorted to cherry-picking the most favorable data points or leaving out crucial context. In some cases, it has been a matter of presenting graphics that do not tell the whole story.For instance, a White House chart late last year depicted a decline in gas prices over a month as a significant drop. However, the rows of plunging bars showed a decrease of just 10 cents.Inflation has been the most slippery subject, with Biden administration officials often focusing on different measures as they seek silver linings in monthly reports.Cecilia Rouse, the chair of the White House’s Council of Economic Advisers, appeared to misstate the figures in an interview with CNN last month when she was pressed about why “core” inflation, which excludes food and energy prices, was at its highest level in 40 years in September.“So, if one looks month on month, it was actually flat,” Ms. Rouse said.The monthly rate had actually risen by 0.6 percent, a significant increase. The administration said that Ms. Rouse had misspoken and intended to say that core inflation was unchanged for two consecutive months, not that it was zero.Mr. Biden’s comment to Jimmy Kimmel in June about America’s rapid economic growth being the fastest in the world was contradicted by an International Monetary Fund report in July that showed several countries in Europe and Asia were growing faster than the United States this year. The fund predicted at the time that the United States would grow at a sluggish 2.3 percent in 2022 and further downgraded its outlook last month. In this case, the administration said that Mr. Biden was referring to the pace of America’s recovery from the pandemic compared to other major economies.The more recent presidential pronouncement at a forum in October that the student debt relief program passed Congress was perhaps the most head-scratching. It was starkly at odds with the reality that Mr. Biden rolled out the initiative through executive action and that it was being challenged in the courts. A White House official said that Mr. Biden was referring to the passage of the Inflation Reduction Act, which did not include student debt relief.And when Mr. Biden said in September gas prices were averaging below $2.99 a gallon in 41 states and the District of Columbia, they were actually $1 higher. The White House corrected the transcript of his remarks.The Social Security misstep has been portrayed across the spectrum as the biggest blunder.The suggestion by Mr. Biden that the increase in the Social Security cost of living adjustment was a sign of economic health drew bewilderment from Democrats and scorn from Republicans after the White House reinforced the point in a Twitter post from its account on Tuesday.“The only thing the White House can take credit for is the historic inflation that led to the need to increase Social Security payments,” Republicans on the House Ways and Means Committee said in a statement.By Wednesday afternoon, the White House had deleted the tweet.Karine Jean-Pierre, the White House press secretary, tried to explain its removal by saying that the message was lacking crucial information about other ways older Americans were saving money through lower Medicare premiums.“Look, the tweet was not complete,” she said. “Usually when we put out a tweet we post it with context, and it did not have that context.” More

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    Chip Makers, Once in High Demand, Confront Sudden Challenges

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    Demand for semiconductors was off the charts last year. But a sharp slowdown coupled with new U.S. restrictions against China have created obstacles.A few months ago, makers of computer chips seemed on top of the world.Customers could not get enough of the small slices of silicon, which act as the brains of computers and are needed in just about every device with an on-off switch. Demand was so strong — and U.S. dependence on a foreign manufacturer so worrying — that Democrats and Republicans agreed in July on a $52 billion subsidy package that included grants to build new chip factories in America.U.S. chip makers such as Intel, Micron Technology, Texas Instruments and GlobalFoundries pledged huge expansions in domestic manufacturing, betting on a growing need for their products and the prospects of federal subsidies.But lately, supplies of some semiconductors are piling up, which could spell good news for consumers but not for industry executives. Their bold investment plans are running into a sudden and unexpected slowdown in consumer demand for electronic gadgets, new U.S. restrictions on sales to customers in China, rising inflation and the unusual prospect of a simultaneous shortage of some chips and glut of others.That has left chip makers, which had been looking ahead to immense demand and opportunity, suddenly grappling with immense challenges. Many of the companies now face complex questions about whether and when to boost production, amid uncertainty about how long the current sales slowdown may last.“Six months ago, I would have said we were in this hypergrowth phase,” Rene Haas, chief executive of Arm, the British company whose chip technology powers billions of smartphones, said of the broader industry. Now, he said, “we’re in a pause.”For many consumers, products that were scarce because of a chips shortage may start becoming more available, though not immediately. Automakers, which have struggled to make enough cars with the lack of chips and other components, said they were getting more but still face some problems. Prices of smartphones and computers could also fall as chip supplies grow and prices plummet for two types of memory chips they use.But for now, not everyone is able to get all the chips they need, and prices remain high for many kinds of semiconductors. “We are still way above prepandemic pricing,” said Frank Cavallaro, chief executive of A2 Global Electronics and Solutions, a chip distributor.Fears of a slump, which have clobbered semiconductor stocks this year, are evident in recent earnings announcements from chip makers. South Korea’s SK Hynix on Wednesday reported a 20 percent drop in revenue and said its business of memory chips “is facing an unprecedented deterioration in market conditions.” Intel provided more evidence of a downturn in its third-quarter results on Thursday, including a 20 percent drop in revenue and a $664 million charge to cover cost-cutting measures expected to include job cuts.The Biden administration delivered its own blow this month with sweeping restrictions aimed at hobbling China from using U.S. technology related to chips. The measures restrict sales of some advanced chips to Chinese customers and prevent U.S. companies from helping China develop some kinds of chips.That hurts semiconductor companies like Nvidia, which makes graphics chips used to run A.I. applications in China and elsewhere. The Silicon Valley company, already suffering from a sharp sales decline for video game applications, recently estimated that the U.S. restrictions would probably reduce revenues in its current quarter by about $400 million.The sanctions may bite even harder at companies that sell chip-making equipment, which relied heavily in recent years on sales to Chinese factories.Lam Research, which produces tools that etch silicon wafers to make chips, estimated that the China limitations would reduce its 2023 revenue by $2 billion to $2.5 billion. “We lost some very profitable customers in the China region, and that’s going to persist,” Doug Bettinger, Lam’s chief financial officer, said during an earnings call last week.Applied Materials, the biggest maker of chip manufacturing tools, also said sales would suffer because of the restrictions. On Wednesday, another maker of chip manufacturing tools, KLA, said its revenue next year was likely to shrink by $600 million to $900 million as it reduces equipment sales and services to some customers in China.Worries about foreign competition are nothing new in semiconductors, an industry known for boom-and-bust cycles. But it has rarely faced a player as potent as the Taiwan Semiconductor Manufacturing Company, whose factories on the island churn out chips designed by companies including Apple, Amazon, Nvidia and Qualcomm.China claims Taiwan as its own territory, creating a potential risk to chip supplies. That helped drive the recent bipartisan support for the U.S. chip legislation, which was heavily pushed by President Biden.President Biden trekked to Albany, Ohio, last month for the ground breaking of a $20 billion Intel manufacturing campus. Pete Marovich for The New York TimesHe trekked to Ohio last month for the ground breaking of a $20 billion Intel manufacturing campus. On Thursday, President Biden visited a site near Syracuse, N.Y., where Micron has vowed to spend as much as $100 billion over 20 years on a large complex to build memory chips, a project he called “one of the most significant investments in American history.”Those plants will be needed at some point, industry executives said. But they are now grappling with the sudden and sharp decline in chip demand. The problem is particularly acute in processors and memory chips, which perform calculations and store data in personal computers, tablets, smartphones and other devices.Those products were hot commodities as consumers worked from home during the coronavirus pandemic. But that boom has now cooled, with PC sales dropping 15 percent in the third quarter, according to estimates by International Data Corporation. The research firm also predicted that smartphone sales would fall 6.5 percent this year. Demand has been tempered by inflation as well as a lengthy Covid lockdown in China, analysts said.At the same time, inventories of chips piled up. Computer makers spooked by the shortage bought more components than they ended up needing, said Dan Hutcheson, a market researcher at the firm TechInsights. When customer demand dried up, they started slashing orders.“You see multiple issues converging,” said Syed Alam, who leads Accenture’s global high tech consulting practice, including semiconductors.Handel Jones, chief executive at International Business Strategies, predicts that total sales for the chip industry will still grow 9.5 percent this year. But he expects revenue to decline 3.4 percent to $584.5 billion next year. Last year, he had predicted steady yearly growth for the chip industry from 2022 until 2030.Warning signs included Intel’s second-quarter results, which it announced in July. The company posted a rare loss and a 22 percent drop in revenue, blaming its own missteps and customers who cut chip inventories.At Micron, the mood also changed quickly. In May, the company gave bullish presentations at an investor event in San Francisco about long-term demand for its memory chips. By the next month, it was warning of slowing demand and falling chip prices.In September, the company reported a 20 percent drop in fourth-quarter revenue. It also slashed planned spending on factories and equipment by nearly 50 percent in the current fiscal year.The swing in demand might seem to undercut Micron’s widely publicized expansion plans, which include the Syracuse complex and a new $15 billion factory in Boise. But chip manufacturers often juggle different time schedules. Since new factories take roughly three years to complete, waiting too long to build can leave them short-handed when sales rebound.“The long-term outlook for memory and storage is robust,” said Mark Murphy, Micron’s executive vice president and chief financial officer. The cuts in near-term capital spending, he added, are a needed response “to bring our supply in line with demand.”Intel’s situation is even more complex. The company has major factory expansions underway in Arizona, Oregon, New Mexico, Ireland and Israel, in addition to the new manufacturing campus in Ohio and one planned for Germany. Intel is also determined to start competing with T.S.M.C. in manufacturing for other companies, as well as making chips it designs.The Taiwan Semiconductor Manufacturing Company is a potent player in semiconductors, with factories that churn out chips designed by companies including Apple, Amazon and Qualcomm.An Rong Xu for The New York TimesIntel now plans to construct factory buildings while holding off on purchases of the costly machines inside them, which are a much bigger expense.Those purchases can be tailored to emerging demand for particular kinds of chips, said Keyvan Esfarjani, Intel’s executive vice president who oversees construction and operation of its factories. He said the long-term need to reduce U.S. and European dependence on chips made in Asia was too important to be halted by short-term business cycles.“This is beyond Intel,” Mr. Esfarjani said in an interview last month. “This is important for people, for communities, for the United States. It’s important for national security.” More