U.S. Takes Aim at China’s Production of Essential Chips

The Biden administration on Monday initiated a trade investigation into China’s production of older types of computer chips that are integral for cars, dishwashers, telecom networks and military weaponry.

The probe could ultimately result in tariffs or other measures to block Chinese chips from entering U.S. markets, though the decision of which, if any approach to take would fall to the incoming Trump administration.

In industry after industry — from steel and ships to solar panels and electric vehicles — China has pumped money into building world-class manufacturing facilities, creating a surge of low-cost products that ultimately flood global markets. American companies, along with firms in many other countries, finding themselves unable to compete, have shut down, leaving Chinese firms largely in control of the global market.

United States officials have been worrying that the semiconductor industry could be next. Chinese companies have been massively ramping up their production of chips, particularly the older types of semiconductors that continue to power a wide array of machinery and appliances. China is building more new semiconductor factories than any other country, a development that American officials argue threatens the viability of chip plants in Europe and the United States.

Katherine Tai, the United States Trade Representative, said in a call on Sunday that China’s policies were enabling its companies to rapidly expand and to “offer artificially lower-priced chips that threaten to significantly harm, and potentially eliminate, their market-oriented competition.”

That resulted in supply chains that “are more vulnerable and subject to supply chain choke points that can be used to economically coerce other countries,” she said.