Biden launches new Chinese language chips commerce probe, will hand off to Trump

By David Lawder

WASHINGTON (Reuters) -The Biden administration introduced on Monday a last-minute commerce investigation into older Chinese language-made “legacy” semiconductors that might heap extra U.S. tariffs on chips from China that energy on a regular basis items from autos to washing machines to telecoms gear.

U.S. Commerce Consultant Katherine Tai mentioned the probe goals to guard American and different semiconductor producers from China’s huge state-driven buildup of home chip provide.

The “Part 301” probe, launched 4 weeks earlier than President-elect Donald Trump takes workplace on Jan. 20, will likely be handed over to his administration in January for completion, Biden administration officers mentioned.

The hassle may supply Trump a prepared avenue to start imposing a number of the hefty 60% tariffs he has threatened on Chinese language imports.

Departing President Joe Biden has already imposed a 50% U.S. tariff on Chinese language semiconductors that begins on Jan. 1. His administration additionally has tightened export curbs on superior synthetic intelligence and reminiscence chips and chipmaking tools.

Legacy chips use older manufacturing processes launched greater than a decade in the past and are sometimes far easier than chips utilized in AI purposes or subtle microprocessors.

U.S. Commerce Secretary Gina Raimondo mentioned on Monday her division’s analysis confirmed that two-thirds of U.S. merchandise utilizing chips had Chinese language legacy chips in them, and half of U.S. corporations didn’t know the origin of their chips together with some within the protection business, findings that have been “pretty alarming.”

China’s commerce ministry mentioned in a press release that the U.S. chips probe was “protectionist” and would damage American companies and disrupt the worldwide chip provide chain. It mentioned Beijing would “take all crucial measures to firmly defend its rights and pursuits.”

A spokesperson for Trump’s transition group didn’t instantly reply to a request for remark.

Tai informed reporters the commerce company has discovered proof that China is focusing on the semiconductor business for world domination, including: “That is enabling its corporations to quickly develop capability and to supply artificially lower-priced chips that threaten to considerably hurt and probably get rid of their market-oriented competitors.”

PUBLIC HEARING IN MARCH

The Biden administration will start accepting public feedback on the probe on Jan. 6, and has deliberate a public listening to for March 11-12, based on a Federal Register discover on the probe, which is due for completion inside a 12 months.

The probe is being performed below Part 301 of the Commerce Act of 1974, the identical unfair commerce practices statute Trump invoked to impose tariffs of as much as 25% on some $370 billion price of Chinese language imports in 2018 and 2019, triggering a virtually three-year commerce warfare with Beijing.

The Data Know-how Trade Council, a commerce group representing the U.S. tech sector, mentioned the probe may have complicated and far-reaching implications for the worldwide financial system and provide chains and urged the USTR to “not prejudge the result.”

Jason Oxman, the group’s president, mentioned he was involved in regards to the probe’s launch throughout a presidential transition, “and we strongly urge officers within the present and incoming administrations to conduct the inquiry in an goal and collaborative method,” ITIC President Jason Oxman mentioned in a press release.

Most U.S. smartphones, laptop computer computer systems, online game consoles and different shopper electronics merchandise are nonetheless imported from China.

DOWNSTREAM GOODS PROBED

A Biden administration official mentioned that along with inspecting the influence of the imported chips themselves, the probe would have a look at their incorporation into downstream parts and end-use items for vital industries together with protection, automotive merchandise and medical units.

It additionally will goal China’s manufacturing of silicon carbide substrates and wafers for semiconductor fabrication.

After the COVID-19 pandemic disrupted the provision of semiconductors and quickly halted manufacturing of autos and medical tools, the U.S. has sought to construct its personal semiconductor provide chain with $52.7 billion in new subsidies for chip manufacturing, analysis and workforce growth.