Key Takeaways:
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- USTR launches Section 301 probe into China’s semiconductor practices
- Investigation targets “foundational” chips used in key industries
- China’s manufacturing capacity expected to double by decade’s end
- Over two-thirds of US companies use Chinese-made chips
What Happened?
The US Trade Representative’s office has initiated a Section 301 investigation into China’s semiconductor industry practices, focusing on alleged “anti-competitive and non-market” measures. The probe targets foundational semiconductors used in automotive, healthcare, infrastructure, aerospace, and defense sectors. This move comes in the final weeks of the Biden administration, with potential decisions on tariffs or restrictions falling to the incoming Trump administration.
Why It Matters?
This investigation represents a significant shift in US semiconductor policy:
- Expands focus beyond cutting-edge AI chips to include legacy semiconductors
- Addresses concerns about China’s growing manufacturing capacity
- Highlights vulnerabilities in US supply chains
- Responds to warnings about potential market disruption similar to solar panel industry
What’s Next?
The investigation could lead to several outcomes under the Trump administration:
- New import restrictions or tariffs on Chinese chips
- Enhanced support for domestic semiconductor production
- Potential trade tensions between US and China
- Impact on global semiconductor supply chains
Markets should monitor:
- Implementation of any new trade measures
- Effects on US-China trade relations
- Impact on semiconductor pricing and availability
- Responses from both US and Chinese manufacturers
This development could significantly influence global semiconductor markets and US-China trade relations in 2025 and beyond.
