The Biden administration has launched a major investigation into China's growing control of legacy semiconductor manufacturing, citing concerns about unfair trade practices and national security risks.
The US Trade Representative (USTR) will conduct a year-long probe examining whether China's semiconductor industry practices constitute unfair competition that threatens American businesses and strategic interests.
According to USTR statements, China is projected to control over 60% of global legacy chip production capacity by decade's end. The investigation will scrutinize China's "Made in China 2025" strategy, which sets ambitious market share targets backed by extensive state support.
US officials allege that China's dominance stems from anti-competitive behaviors, including:
- Selling chips 30-50% below production costs
- Forced technology transfers
- Cyber intrusions
- Wage-suppressing labor practices
- Billions in state subsidies
"China's acts appear to threaten detrimental impacts on American industry, workers, critical supply chains, and economic security," said US Trade Representative Katherine Tai.
The probe focuses on legacy chips - older generation semiconductors still widely used in cars, medical devices, defense systems and other critical applications. Industry experts warn that finding alternatives to Chinese components at similar prices and volumes presents major challenges.
A public hearing is scheduled for March 2025. The Semiconductor Industry Association supports the investigation but urges close coordination between government and industry stakeholders.
The investigation comes amid broader US efforts to strengthen domestic semiconductor manufacturing through the $52 billion CHIPS Act. However, experts caution that Chinese market manipulation could undermine these investments' effectiveness.
President-elect Trump is expected to maintain pressure on China's tech ambitions when he takes office. Earlier proposals included potential 60% tariffs on Chinese imports.
For businesses, the probe's implications include possible supply chain disruptions and increased costs. Companies may need to diversify suppliers and potentially adopt US-made chips, though price differences remain a concern.
The investigation represents the latest development in escalating US-China competition for technological leadership. Its outcome could reshape semiconductor industry dynamics and impact strategic sectors relying on these critical components.