China's Ministry of Commerce (MOFCOM) has initiated an investigation into U.S. semiconductor subsidies provided under the CHIPS and Science Act, claiming they potentially damage Chinese chipmakers' interests.
The probe comes after Chinese companies filed complaints about the $52.7 billion U.S. legislation, which aims to boost American semiconductor manufacturing, research, and workforce development. MOFCOM alleges these subsidies enable U.S. companies to export mature-technology chips to China at artificially low prices.
Several U.S. manufacturers, including GlobalFoundries, SkyWater Technologies, Microchip, Polar, and Texas Instruments, have received funding under the Act. These companies primarily produce chips using established manufacturing processes rather than cutting-edge technology.
The investigation highlights growing tensions in the global semiconductor market, particularly around mature chip technologies widely used in everyday consumer electronics and appliances. China has heavily invested in expanding its domestic chip production capacity, with analysts at Barclays projecting a 60% increase over three years.
Chinese officials appear concerned about protecting their substantial investments in semiconductor manufacturing facilities, many of which focus on older generation chips and receive government support. The country aims to become self-sufficient in chip production while expanding its market presence globally.
However, questions remain about whether MOFCOM's claims have merit, as U.S. companies receiving CHIPS Act funding must still make substantial private investments. This requirement suggests the subsidies may not directly enable price reductions in exported chips.
The probe underscores the complex dynamics of the global semiconductor industry, where government support, market competition, and technological advancement intersect with national interests and trade policies.