US launches new probe into legacy Chinese chips

The Biden administration on Monday said it had launched a new investigation into legacy Chinese semiconductors that could cover everything from cars to household goods and defense systems.

China “routinely engages in non-market policies and practices as well as industrial targeting” of the chip industry, allowing Chinese firms to “significantly harm competition and create dangerous supply chain dependencies in core semiconductors,” it said in a statement of the White House.

The so-called Section 301 investigation will look into China’s “actions, policies and practices for the production of silicon carbide substrates or other wafers used as raw materials in semiconductor manufacturing,” the White House added.

Overall, Washington’s investigation seeks to assess US reliance on legacy Chinese chips in areas ranging from telecommunications to the power grid.

The new investigation marks an escalation of US pressure on China’s semiconductor industry. To date, many of the actions Washington has taken have targeted cutting-edge chips, particularly those used in the burgeoning artificial intelligence sector.

So-called legacy chips are produced with less advanced manufacturing techniques. Chinese chipmakers are still generations behind industry leaders like TSMC, but they are capable of producing legacy chips at scale.

The latest investigation into Chinese legacy chips is being conducted under the 1974 Trade Act. One potential remedy that could be imposed under this law is the imposition of duties on the products in question.

The Biden administration has continued to target China’s technology sector this year with increased tariffs on imports of products from electric vehicles to semiconductors. The latest action comes just weeks before the sitting US president hands over the reigns to Donald Trump.

Reuters, citing Biden administration officials, reported on Monday that the investigation into the legacy chips would be handed over to the Trump administration for completion.