US Initiates Probe into Chinese Semiconductor Industry Amid Transition
Washington D.C., Tuesday, 24 December 2024.
The US has launched an investigation into the Chinese semiconductor sector, highlighting its significance in global supply chains during a politically sensitive period.
Critical Timing and Scope
The investigation, announced on December 1, 2024, comes as the Biden administration prepares to transition power to president-elect Donald Trump [1]. This probe specifically targets advanced chip manufacturing practices and includes stricter export controls on high-bandwidth memory chips and semiconductor manufacturing equipment [5]. The timing is particularly significant as China has recently responded with its own restrictive measures, including a ban on exports of critical minerals such as gallium, germanium, and antimony to the US [3].
Market Impact and Global Supply Chain Disruption
The semiconductor industry faces significant disruption as China currently imports over $300 billion worth of semiconductors annually [5]. The new US regulations are already affecting major players, with companies like NVIDIA and AMD experiencing direct impacts from export restrictions [5]. China’s retaliatory measures have caused substantial market shifts, with antimony trioxide prices in Rotterdam surging by 228% to $39,000 per tonne since the start of 2024 [3]. The conflict has particularly affected TSMC, which has been struggling to maintain its neutral position while serving both US and Chinese markets [2].
Industry Response and Strategic Shifts
Chinese industry groups have responded by calling for domestic semiconductor purchases, claiming US chips are no longer safe or reliable [3]. According to Peter Arkell, chairman of the Global Mining Association of China, ‘It’s a trade war that has no winners’ [3]. The situation has led to a bifurcated supply chain, with both US and Chinese firms accelerating the development of domestic capabilities [4]. The Internet Society of China has stated that ‘US chip export controls have caused substantial harm to the health and development of China’s internet industry’ [3].
Future Implications
The investigation signals a potential deepening of tech tensions between the world’s two largest economies. With China controlling 98.8% of refined gallium production globally in 2024 [3], the impact on global supply chains could be severe. The US continues to implement initiatives through the CHIPS for America Act and National Semiconductor Technology Center to enhance domestic capabilities [4], while China accelerates its semiconductor development through programs like Made in China 2025 [4]. Industry experts anticipate these developments will lead to higher consumer prices and slower innovation due to reduced market competition [5].