China Launches Probe into US Chip Dumping Allegations
In a bold move, China’s Commerce Ministry has announced an investigation into claims that the US is engaging in unfair trade practices by dumping lower-end chips and providing illegal subsidies to its domestic chipmakers. This probe could be one of Beijing’s strongest retaliatory measures against American technology sanctions.
Unfair Advantage?
The Chinese government will examine whether the US is giving its chipmakers an unfair edge through incentives and grants, or illegally undercutting Chinese products. This investigation was sparked by protests from local industry players, who claim that the US Chips Act, which provides $39 billion in funding to attract firms like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. to build high-end chipmaking capacity in America, is distorting the global semiconductor supply chain.
China’s Chip Industry Speaks Out
The China Semiconductor Industry Association has taken aim at the US Chips and Science Act, stating that it “violates the fundamental principles of a market economy and caused profound and significant impact on the global semiconductor supply chain.” The association’s statement highlights the concerns of Chinese chipmakers, who feel that the US is unfairly supporting its domestic industry.
Lower-End Chips in the Crosshairs
Several US firms, including Texas Instruments Inc. and Analog Devices Inc., are leaders in lower-end products such as power and analog chips, which are ubiquitous in modern devices from cars to appliances. These chips help regulate power flows or translate digital signals, and Beijing’s investigation could have significant implications for these companies.
Echoes of US Complaints
China’s investigation mirrors a longstanding US complaint that China’s government openly bankrolls its domestic firms in contravention of global trade agreements. US and European officials have also warned of the risk that Chinese companies could eventually flood global markets with cheap chips, potentially disrupting the global supply chain.
Consequences Uncertain
It is unclear what the consequences could be for any company found violating antitrust or anti-dumping regulations. The Chinese government could impose higher or company-specific tariffs, depending on its findings. In the past, Beijing has threatened US companies with product bans or hefty fines, as seen in the cases of Qualcomm Inc. and Micron Technology Inc.
Global Implications
The European Union has also considered reviewing how widely its businesses use mature or lower-end chips from China, joining the US in flagging a potential risk to national security and global supply chains. As the global chip market continues to evolve, this investigation could have far-reaching implications for companies and governments around the world.
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