The Biden administration has roll out Formal investigation into legacy semiconductors made in China, citing potential risk to country Safety and critical infrastructure. The concerns stem from Chinese government-sponsored production that allows manufacturers to flood the market with prices that other companies cannot compete with, as well as ongoing safety concerns and supply chain dependencies.
Traditional semiconductors, vital to industries such as automotive, telecommunications and defense, are made using older production technologies. While much of the world’s attention is focused on advanced chips for artificial intelligence, these legacy chips underpin countless everyday and industrial applications. The survey highlights concerns about China’s growing dominance in the sector, driven by heavy government subsidies.
according to a previous reportsChina has been investing aggressively in traditional chip production, using state funds to boost manufacturing capabilities through companies such as Semiconductor Manufacturing International Corporation (SMIC). This is a concern in the United States and Europe about overreliance on Chinese technology, as these subsidies undermine competition in global markets.
Traditional semiconductors are particularly important as production has shrunk in the United States and Europe and many manufacturers are focusing on cutting-edge chips for artificial intelligence. The shift has left Western countries dependent on Chinese suppliers for old chips for vehicles, medical equipment and military equipment.
The latest investigation seeks to determine whether Chinese-made chips pose an espionage risk or could be used to disrupt supply chains, in line with broader U.S. efforts to protect its semiconductor industry under the Chip and Science Act.
Chinese subsidies have been criticized for exacerbating global supply chain dependence and undermining competition. These subsidies not only enable Chinese manufacturers to dominate the traditional chip market, they also limit opportunities for non-Chinese manufacturers. This can lead to supply chain vulnerabilities, especially during times of geopolitical tension.
The Commerce Department’s investigation could result in new restrictions, including tariffs, tighter export controls or outright bans on certain imports. However, given the global integration of the traditional chip market, transitioning away from Chinese suppliers could be costly and time-consuming.