The United States has launched an investigation into China’s semiconductor industry, citing concerns over anti-competitive practices that could undermine U.S. economic and national security interests. The probe, announced by the Office of the U.S. Trade Representative (USTR), comes just weeks before President-elect Donald Trump is set to take office, potentially shaping the next administration’s trade policies.
The investigation is being conducted under Section 301 of the U.S. Trade Act of 1974 and focuses on China’s strategies to dominate global markets for legacy semiconductors. These chips are widely used in sectors such as automotive, defense, telecommunications, and household electronics. The inquiry will examine whether Chinese subsidies and industrial policies have created unfair advantages that harm competition and weaken global supply chains.
The USTR stated that China employs “non-market policies and practices,” including subsidies and production targets, to boost domestic manufacturing and achieve self-sufficiency. This approach, according to the USTR, threatens U.S. technological competitiveness and supply chain resilience. The investigation could result in tariffs or other trade restrictions targeting Chinese semiconductor products, leaving implementation decisions to the Trump administration.
Washington’s scrutiny of the Chinese semiconductor sector reflects a broader shift in focus from advanced artificial intelligence processors to older, so-called “legacy” chips. While China remains technologically behind industry leaders such as Taiwan Semiconductor Manufacturing Company (TSMC), it has made significant investments to expand its production capacity for mature-node semiconductors, raising concerns about oversupply and pricing pressures.
The U.S. Department of Commerce recently warned that China’s increasing output of legacy chips is already impacting American firms, potentially replicating the challenges faced by Western solar panel manufacturers due to low-cost Chinese imports. Analysts predict China could double its semiconductor production capacity by 2030, driven by state support and technological partnerships.
The Chinese government has yet to issue an official response to the investigation. However, earlier actions indicate potential retaliatory measures. Beijing has previously imposed export controls on critical minerals used in semiconductor production and initiated anti-monopoly investigations into U.S. tech firms. These moves underscore the intensifying technological and trade rivalry between the world’s two largest economies.
U.S. officials argue that reducing dependency on Chinese-made semiconductors is vital for safeguarding national security. The COVID-19 pandemic exposed vulnerabilities in global supply chains, highlighting the importance of stable access to key technologies. The Biden administration has already implemented stricter export controls and higher tariffs on Chinese tech products, signaling continued pressure on Beijing even as leadership transitions to Trump.
Public comments on the investigation will be accepted starting January 6, with hearings scheduled for March 11 and 12. The USTR’s final report, due within 12 months, could shape future trade policies and regulations affecting the semiconductor industry worldwide. – By MENA Newswire News Desk.