Biden to launch probe into Chinese semiconductors over security risks

The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings will be left to the discretion of President-elect Donald Trump's team

By Jenny Leonard and Josh Wingrove

 

President Joe Biden’s administration is set to initiate a trade investigation into Chinese semiconductors in the coming days, as part of a push to reduce reliance on a technology that US officials believe pose national security risks.

The probe could result in tariffs or other measures to restrict imports on older-model semiconductors and the products containing them, including medical devices, cars, smartphones and weaponry, according to people familiar with the matter.

 

The investigation examining so-called foundational chips could take months to conclude, meaning that any reaction to the findings will be left to the discretion of President-elect Donald Trump’s incoming team.

 

Biden officials have for months debated whether to initiate the investigation under Section 301, which allows the US to impose restrictions on countries with unfair trade practices, the people said. This week, White House officials agreed to move forward with the inquiry that could help protect the US chip industry.

 

Approving the probe now means that the new Trump administration will likely have the option to impose trade restrictions to protect domestic semiconductor production in the early months of the president-elect’s term.

 

Bolstering the US semiconductor industry has been a key focus for Biden, who has taken aggressive steps to limit advanced US technology from being exported to China. Biden signed into law legislation that provided billions of dollars of incentives for chipmakers to build semiconductor factories in the US to stave off a need for cheaper Chinese-made chips.

 

Spokespeople for the National Security Council and the US Trade Representative declined to comment.

 

Global Competition

 

The White House has used the past two years to implement export restrictions on advanced semiconductors made with American and allied technology. But in the meantime, China has been able to manufacture the older, widely available types of semiconductors at a lower cost than their competitors.

 

Biden officials worry that without restrictions, Beijing will flood the US and global markets with inexpensive chips that will undercut other companies and run them out of business.

 

In May, the White House announced it will increase tariffs on Chinese legacy semiconductors from the current 25% rate to 50% by 2025. But the Biden team largely agreed that was not enough to prevent a market disruption in the future, especially as the US is looking to increase domestic production of semiconductors.

 

To impose those tariffs, Biden used the same authority Trump employed to levy more than $300 billion in tariffs on Chinese goods during his first term.