The Biden administration has launched a trade investigation into Chinese-made legacy semiconductors, which are critical components in everyday products like automobiles, household appliances, and telecom equipment. This probe, spearheaded by U.S. Trade Representative Katherine Tai, seeks to protect American and other semiconductor producers from what officials describe as China’s aggressive push for global chip market dominance. The legacy chips, which use older manufacturing processes, are simpler than advanced microprocessors but still play a significant role in powering a wide range of consumer products.
The investigation, conducted under Section 301 of the Trade Act, aims to determine whether China’s massive state-driven semiconductor buildup is unfairly impacting the global market. U.S. officials have expressed concerns that China’s artificially low prices for these chips threaten to undermine market-oriented competition, particularly for U.S. firms. U.S. Commerce Secretary Gina Raimondo revealed alarming findings that two-thirds of U.S. products using chips contain Chinese legacy semiconductors, with many companies unaware of the origin of their chips, even within the defense industry.
While the investigation is still in its early stages, it signals a continued effort by the U.S. to confront what it views as China’s unfair trade practices in the semiconductor industry. The timing of the probe, just weeks before President-elect Donald Trump takes office, raises the possibility that the investigation will be handed over to the incoming administration. If completed under Trump, the probe could provide a platform for the former president to impose further tariffs on Chinese imports, potentially escalating trade tensions between the two countries.
China has already reacted strongly to the probe, with its Ministry of Commerce labeling the investigation as “protectionist” and warning that it could disrupt the global chip supply chain. Beijing has pledged to take necessary measures to protect its interests. As the investigation progresses, the U.S. Trade Representative’s office plans to hold a public hearing in March 2024, and the final results of the probe are expected to be released within a year. This ongoing scrutiny of China’s semiconductor practices underscores the growing tensions in the global technology supply chain.
