biden Admin Launches Probe into chinese Semiconductors, Sparking Trade Tensions
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The Biden governance announced on December 23rd a sweeping investigation into “legacy semiconductors” manufactured in China, a move that coudl significantly escalate trade tensions and perhaps pave the way for the incoming Trump administration’s planned tariffs.
The investigation, launched under Section 301 of the Trade Act of 1974, will be handed over to the incoming Trump administration for completion in January 2025. This comes as the Biden administration has already announced a 50% tariff on certain Chinese semiconductors,effective January 1st,2025.
The focus of this new probe is on semiconductors produced using older, mature manufacturing processes. These chips are widely used in everyday products like automobiles and appliances, but unlike advanced semiconductors used in AI, they are not at the cutting edge of technology. The Office of the United States Trade Representative (USTR) stated the investigation aims to protect American and other market-driven semiconductor manufacturers from what it calls a state-sponsored expansion of Chinese semiconductor supply.
A USTR representative highlighted evidence suggesting china’s ambition to dominate the global semiconductor market, mirroring its expansion in other sectors like steel, aluminum, solar panels, electric vehicles (EVs), and critical minerals. “This could allow Chinese companies to rapidly expand production capacity and offer semiconductors at artificially low prices, potentially severely undermining or eliminating market-driven competition,” the representative stated.
Public comments on the investigation will be accepted starting January 6th, 2025, with public hearings scheduled for March 11th and 12th, 2025.U.S. Commerce Secretary Raymond Lemond revealed that research indicates two-thirds of U.S.products using semiconductors rely on legacy chips from China, and alarmingly, half of U.S. companies, including those in the defense industry, lack knowledge of their semiconductor supply chains’ origins.
China’s Ministry of Commerce responded with a statement denouncing the investigation as “protectionist,” claiming it will harm U.S. businesses and disrupt the global semiconductor supply chain. They vowed to “take all necesary measures to resolutely protect China’s rights and interests.”
The Data Technology Industry Council (ITI), a prominent U.S.tech industry trade group, urged the USTR to avoid prejudgments and carefully consider the potentially far-reaching global economic and supply chain implications of this investigation. ITI Chairman Jason Oxman expressed concern about the investigation’s timing during a presidential transition.
The notable reliance of the U.S. on China for imported electronics, including smartphones, computers, and gaming consoles, adds another layer of complexity to this developing situation. Biden administration officials emphasized their intention to examine not only the impact of Chinese semiconductor imports but also their integration into downstream components and finished goods crucial for sectors like defense, automotive, and medical equipment.
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Biden’s Semiconductor Probe: Heightening Trade Tensions With china?
The Biden governance’s decision to launch an investigation into Chinese-made “legacy semiconductors” has sparked concerns about rising trade tensions with China and potential ramifications for the global tech industry. This move, initiated under Section 301 of the Trade Act of 1974, comes amidst ongoing tariff debates and highlights the complexities of the US-China economic relationship.
Unpacking the Investigation
World Today News Senior Editor, Sarah Thompson, sat down with Dr. Emily Chen,a leading expert in international trade and technology policy at the Center for Strategic and International Studies,to discuss the implications of this probe.
Sarah Thompson: Dr. Chen, can you help our readers understand what this investigation is all about and why it’s causing such a stir?
Dr. Emily Chen: The investigation focuses on semiconductors manufactured in China using older technologies. While these “legacy” chips might not be the cutting edge, they are essential components in a wide range of everyday products – from cars and appliances to medical devices and infrastructure. The Biden administration is concerned that China’s aggressive push in this sector, possibly fueled by state subsidies, could distort the global market, harming US manufacturers and innovation.
Sarah Thompson: So, the issue isn’t necessarily about the sophistication of these chips, but rather the potential for China to flood the market with artificially cheap ones?
Dr. Emily Chen: Precisely. This could undercut US producers, making it difficult for them to compete and potentially leading to job losses. The US Trade Representative also expressed concerns about China’s broader ambition to dominate the semiconductor market, citing parallels with its expansion in sectors like solar panels and electric vehicles.
supply Chain Concerns and Global impact
Sarah Thompson: The Biden administration has said that many US companies, including those in the defence industry, lack visibility into their semiconductor supply chains. How meaningful is this issue?
Dr. Emily Chen: It’s a major vulnerability. A lack of transparency makes it difficult to identify and mitigate risks, whether those are related to national security, intellectual property, or simply ensuring a reliable supply of critical components.
Sarah Thompson: China has criticized the investigation as “protectionist” and warned of potential retaliation. What are the broader implications for the already tense US-China relationship?
Dr. Emily Chen: This investigation is likely to further strain relations, especially if it leads to new tariffs or restrictions on Chinese semiconductor imports. We could see retaliatory measures from China, impacting US businesses and consumers alike.The timing, coming just as the new administration takes office, also adds another layer of complexity.
Sarah Thompson:
What do you see as the potential outcomes of this probe, and what should businesses and consumers be watching for?
Dr. Emily Chen:
The investigation could lead to various outcomes, from negotiated settlements and stricter regulations to outright trade restrictions.Businesses should closely monitor the developments, assess their potential vulnerability to supply chain disruptions, and consider diversification strategies. Consumers may face higher prices for electronics and other goods reliant on semiconductors.Ultimately, the outcome of this investigation will have lasting implications for the global technology landscape and the future of US-china trade relations.
