biden administration investigates chinese chip imports
Washington D.C., Tuesday, 24 December 2024.
The Biden administration has initiated a trade investigation into Chinese-made traditional semiconductors. This move could pave the way for tariffs similar to those imposed during the Trump administration. The investigation focuses on older semiconductors, essential for various products like vehicles and telecom equipment. Concerns have been raised about China’s growing dominance in chip production, potentially threatening U.S. and European manufacturers. The probe is part of ongoing tensions between the U.S. and China over trade practices. China’s Ministry of Commerce labeled the investigation as protectionist, hinting at possible retaliation. The outcome could significantly impact global supply chains, raising concerns for companies reliant on these chips. The investigation results and any potential tariffs will be closely monitored, especially as the incoming Trump administration prepares to take office, inheriting this critical trade issue.
Market implications of the investigation
The Biden administration’s probe targets China’s mature semiconductor industry, which supplies approximately 66% of chips used in U.S. products [4]. Commerce Secretary Gina Raimondo expressed concern about China’s plans to expand traditional chip production to over 60% of global market share [1]. This market dominance could significantly impact investment patterns, with potential investors becoming hesitant to fund chip production facilities outside China [4].
Industry expert perspectives
Chris Miller, a professor at Tufts University, highlights that Chinese government’s substantial semiconductor industry investments enable below-market pricing [2]. However, Stacy Rasgon, Managing Director at Bernstein Research, questions the actual risk level for older generation semiconductors [2]. The Information Technology Industry Council warns of potential supply chain disruptions if new tariffs are implemented [2].
Strategic economic considerations
U.S. Trade Representative Katherine Tai has identified evidence of Beijing’s attempts to dominate the semiconductor industry [1]. The investigation extends beyond chip imports to examine impacts on critical sectors including defense, automotive, and medical equipment manufacturers [1]. This comes as the U.S. has already committed $52.7 billion to support domestic chip manufacturing [1].
Timeline and transition implications
The investigation, launched on December 23, 2024, will begin accepting public comments from January 6, 2025, with hearings scheduled for March 11-12 [1]. The probe must be completed within one year of initiation if continued under the Trump administration [1]. The transition timing is particularly significant as the investigation will be inherited by Trump’s administration after his January 20 inauguration [5].