The US government has launched a trade investigation into China’s production of older computer chips, known as “legacy chips,” which are crucial for a wide range of appliances and machinery. The Biden administration has been concerned about the impact of Chinese companies on the global chip market, with estimates suggesting that China could soon dominate 40% of global capacity in foundational chips by 2032.
The investigation will look into whether China’s policies enable its companies to produce these legacy chips at artificially low prices, posing a threat to US companies and the global supply chain. US officials argue that Chinese dominance of the chip market poses serious risks to national security, including erosion of the US industrial base, creation of supply chain choke points, and potential cyber threats.
The investigation is being carried out by the Office of the US Trade Representative under Section 301 of the Trade Act of 1974 and typically takes six months to a year to conclude. The decision on whether to impose tariffs or other measures will be made by the incoming Trump administration.
Industry groups have expressed concern about the timing of the investigation, with some officials speculating that President-elect Donald J. Trump could view the tariffs as a bargaining chip in trade negotiations. However, others have urged caution and called for a thorough investigation.
The investigation marks a significant escalation in the US-China “chip war,” which has been building over concerns about China’s rapid expansion of its semiconductor industry and its growing influence on global supply chains.
Source: https://www.nytimes.com/2024/12/23/business/economy/us-china-semiconductor-legacy-chips.html