In a move signaling escalating tensions in the global semiconductor industry, China announced on Thursday its intention to launch a trade investigation into US chip exports. The probe, aimed at mature-process chips used in products ranging from cars to household appliances, follows allegations of unfair trade practices and excessive subsidies granted by the US government to its domestic chip sector.
China’s Concerns
China’s Ministry of Commerce stated that domestic companies have accused the US of providing “substantial subsidies” to its chipmakers, granting them an “unfair competitive advantage” in the global market. The ministry claims these subsidies have enabled US firms to export chips to China at prices that harm local industries.
“The concerns of China’s domestic industry are reasonable, and they have the right to request a trade remedy investigation,” a ministry spokesperson said. However, specific details about the timeline or duration of the investigation were not disclosed.
US-China Tech Rivalry
The announcement comes amidst heightened tensions between Beijing and Washington over technology and trade. The United States has been ramping up export restrictions on advanced chips and semiconductor technologies, citing national security concerns. US officials argue that advanced chips could enhance China’s military capabilities and strengthen its surveillance systems.
In response, Beijing has repeatedly accused Washington of protectionist policies, criticizing its measures as unfair and detrimental to free trade. Chinese officials have vowed to safeguard their domestic interests while urging the US to cease its “wrong practices.”
US Tightens Chip Export Controls
China’s announcement follows new measures introduced by the US Commerce Department to tighten export controls on advanced computing chips and artificial intelligence (AI) technologies. These restrictions aim to prevent sensitive technologies from being diverted to entities that could pose risks to US national security.
Under the revised rules, companies exporting advanced chips to China face stricter licensing requirements and heightened reporting obligations, particularly for transactions involving new customers deemed higher-risk.
The US has also implemented fresh curbs on AI chip exports, making it increasingly difficult for China to access cutting-edge technologies critical for military and defense applications.
Focus on “Legacy” Chips
China’s probe is focused on mature or “legacy” semiconductors, which are less technologically advanced than cutting-edge chips. Unlike advanced chips used in military and high-tech applications, legacy chips are integral to everyday products such as medical devices, home appliances, and broadband systems.
These chips, while not as sophisticated, play a vital role in industries critical to both nations. By targeting this sector, China signals its intent to protect its domestic industry even in areas where technological complexity is less pronounced.
Implications for Global Trade
This investigation highlights the deepening trade and technological rivalry between the world’s two largest economies. As the semiconductor industry forms the backbone of modern technology, any disruption in the global chip supply chain could have far-reaching consequences for industries worldwide.
For China, the probe could provide leverage in ongoing trade disputes, while for the US, it serves as another reminder of the challenges in maintaining technological dominance in an increasingly polarized world.
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