The Biden administration on Monday announced a last-minute trade investigation into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from autos to washing machines to telecoms gear.
US Trade Representative Katherine Tai said the probe aims to protect American and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply.
The “Section 301” probe, launched four weeks before President-elect Donald Trump takes office on Jan. 20, will be handed over to his administration in January for completion, Biden administration officials said.
The effort could offer Trump a ready avenue to begin imposing some of the hefty 60% tariffs he has threatened on Chinese imports.
Departing President Joe Biden has already imposed a 50% tariff on Chinese semiconductors that starts on Jan. 1.
His administration also has tightened export curbs on advanced artificial intelligence and memory chips and chipmaking equipment.
Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than chips used in AI applications or sophisticated microprocessors.
Commerce Secretary Gina Raimondo said on Monday her department’s research showed that two-thirds of US products using chips had Chinese legacy chips in them, and half of US companies did not know the origin of their chips including some in the defense industry, findings that were “fairly alarming.”
China’s commerce ministry said in a statement that the U.S. chips probe was “protectionist” and would hurt American firms and disrupt the global chip supply chain. It said Beijing would “take all necessary measures to firmly defend its rights and interests.”
A spokesperson for Trump’s transition team did not immediately respond to a request for comment.
Tai told reporters the trade agency has found evidence that China is targeting the semiconductor industry for global domination, adding: “This is enabling its companies to rapidly expand capacity and to offer artificially lower-priced chips that threaten to significantly harm and potentially eliminate their market-oriented competition.”
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