The United States has launched a comprehensive investigation into China's semiconductor industry, targeting alleged anticompetitive practices that potentially undermine American economic interests. The probe, initiated by the US Trade Representative's (USTR) office, focuses on foundational semiconductors used in critical sectors including defense, medical devices, and automotive industries. USTR Katherine Tai emphasized a recurring pattern of harmful nonmarket policies by China aimed at achieving global market dominance, highlighting semiconductors as the latest industry under scrutiny.

Commerce Secretary Gina Raimondo revealed alarming findings that two-thirds of US products contain Chinese-made foundational chips, with approximately half of the companies unaware of the Chinese components in their products. This investigation falls under Section 301 of the Trade Act, the same legal mechanism previously used to impose tariff hikes on Chinese products during the Trump administration. The probe will comprehensively examine Beijing's policies on semiconductor input fabrication and assess whether these practices create burdens or restrictions on US commerce.

The investigation comes amid ongoing efforts by the Biden administration to strengthen US chipmaking capabilities and reduce reliance on foreign semiconductor suppliers. National Economic Advisor Lael Brainard described the probe as part of a broader strategy to enhance supply chain resilience and revitalize domestic manufacturing. US officials are particularly concerned about China's ability to expand semiconductor production capacity and offer artificially lower-priced chips that could potentially eliminate fair, market-oriented competition.

The scope of the investigation is extensive, targeting legacy "workhorse" semiconductors that are critical to various industries. Officials will have one year to conduct the investigation and determine appropriate responses. This move reflects growing geopolitical tensions in the technology sector and the strategic importance of semiconductor supply chains. The probe underscores the US government's commitment to protecting domestic technological interests and maintaining a competitive edge in the global semiconductor market.