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The United States launched an investigation into alleged anticompetitive measures by China aimed at supporting its semiconductor industry, just weeks before the Biden administration takes over from President-elect Donald Trump.
The Office of the U.S. Trade Representative said it was investigating “China’s actions, policies, and practices aimed at gaining an advantage in the semiconductor industry.”
The study, conducted under Section 301 of the U.S. Trade Act, will initially target what the USTR calls “basic” semiconductors, including those used in the automotive, medical, infrastructure, aerospace, and defense industries.
This is the latest in a worsening tit-for-tat trade war over semiconductors, raising fears of serious disruption to international supply chains.
Potential outcomes of the Section 301 investigation include import restrictions and new tariffs on shipments from China of the types of chips used in cars, appliances and consumer devices, with the decision pending before the Trump administration. It will be entrusted to you.
The U.S. government on Monday accused China of using “a wide range of anticompetitive and nonmarket measures, including setting and pursuing market share goals, to achieve indigenization and self-sufficiency.” China’s alleged tactics were designed to achieve dominance in the semiconductor industry in China and the global market, USTR said.
After years of focusing semiconductor policy on cutting-edge processors needed to develop advanced artificial intelligence, the Washington government has focused its efforts on chips manufactured using what the industry calls “legacy” production systems. We are focusing more attention on mature end markets that use
Manufacturers of advanced chip-making equipment such as ASML are already restricted from selling their most sophisticated tools to Chinese chipmakers, hindering China’s AI progress and leaving Silicon Valley-based Nvidia is curbing efforts to build rivals.
But that hasn’t stopped Chinese chipmakers from making huge investments to expand production of legacy semiconductors. Some analysts estimate that China is on track to double its chip manufacturing capacity by the end of this decade, backed by subsidies from the Chinese government.
Beijing’s Commerce Ministry “firmly opposes” the latest 301 investigation, saying the measures will disrupt global supply chains and harm the interests of U.S. companies and consumers worldwide.
The report said U.S. companies dominate the global chip market and that the U.S. government provides “huge” subsidies to the domestic chip industry. Beijing also issued a thinly veiled warning of retaliation, saying it would “take all necessary measures” to protect its rights.
Semiconductor executives in the United States and Europe have warned that large imports of low-cost Chinese solar panels could create problems for domestic semiconductor makers similar to those that have caused Western manufacturers in recent years. . Officials also worry that relying on Chinese suppliers could pose national security problems for the United States.
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Often overlooked amid all the hype surrounding AI, the importance of legacy semiconductors has been highlighted during the COVID-19 pandemic as factory closures have led to widespread shortages of everyday electronic products. It became clear.
A report released earlier this month by the U.S. Department of Commerce said China’s recent ramp-up in production of mature node semiconductors “has already begun to create price pressures and could reduce the competitiveness of U.S. chip suppliers.”
More than two-thirds of U.S. companies’ products use chips made in Chinese foundries, the report said.
For decades, China has viewed dependence on the United States and other countries as a fundamental weakness in its national security. But the company has struggled to shake off its dependence on foreign companies for key design and manufacturing techniques needed to make increasingly sophisticated chips.
Earlier this month, the U.S. government targeted China’s cutting-edge chip manufacturing capabilities with new export controls, including tighter shipment limits on semiconductor manufacturing tools and a ban on exports of advanced memory chips needed for AI hardware.
The Chinese government quickly hit back, banning shipments of key minerals and metals used in chip manufacturing to the United States. The company has also launched its own investigation into Nvidia on suspicion of violating the country’s antitrust laws.
