The New York Times reported (December 24, 2024) that the Biden administration has launched a Section 301 trade investigation into China’s mature-node semiconductor industry. This investigation could lead to tariffs or other trade restrictions on Chinese semiconductor imports to the U.S. market. The report also cites insights from DSET CEO Dr. Jeremy Chih-Cheng Chang.
China’s Low-Cost Chip Strategy Raises Global Supply Chain Concerns
China has previously invested heavily in industries such as steel, shipbuilding, solar panels, and electric vehicles, producing low-cost products that led to the closure of companies in the U.S. and other countries, allowing Chinese firms to dominate global markets. Now, semiconductors have become China’s latest strategic focus.
U.S. Trade Representative Katherine Tai warned that China’s expansion into the semiconductor market makes global supply chains more fragile and more susceptible to bottlenecks, which can be leveraged for economic coercion against other countries.
Escalating U.S.-China Tech Confrontation and Economic Security Risks
In recent years, the Biden administration has repeatedly implemented export controls to curb China’s ability to develop advanced semiconductors, while China has retaliated by restricting exports of critical minerals. However, in the mature-node semiconductor sector, the U.S. has not yet taken comprehensive action, despite growing concerns over market shifts.
According to a report from the U.S. Department of Commerce, the number of Chinese semiconductor factories has surged, and by 2032, Chinese companies are expected to account for over 40% of the global mature-node chip production. China’s low-cost strategy has placed significant economic pressure on semiconductor manufacturers in the U.S. and its allies, discouraging further investment. U.S. Secretary of Commerce Gina Raimondo acknowledged these concerns, stating:
“We have already seen that chip companies are reluctant to invest in the U.S. in the face of these trends.”
Preventing Technology Leakage and Geopolitical Challenges
As a key pillar of the global semiconductor supply chain, Taiwan plays a critical role in this ongoing competition. Wu Cheng-Wen, Minister of Taiwan’s National Science and Technology Council (NSTC), noted that China’s low-cost chips appeal to chip designers, which could increase the risk of technology leakage and enable Chinese manufacturers to produce higher-quality chips more efficiently.
DSET CEO Chang further analyzed the geopolitical risks, stating that if China gains control over advanced semiconductor technology, it will have greater leverage in countering U.S. actions. He warned: “China could disrupt the supply chain to impose sanctions on the U.S. and its allies, ultimately shifting the balance in the semiconductor war.”
Taiwan Must Strengthen Its Leadership Position
The U.S. investigation into China’s semiconductor industry highlights the complex geopolitical maneuvering behind global supply chains. Moving forward, it will be crucial to monitor how the Trump administration responds to the investigation’s findings and what measures it takes to counter China’s influence in the sector.
As a global semiconductor powerhouse, Taiwan must take a proactive role in international cooperation to prevent technology transfers to China and reinforce its leadership position. Strengthening Taiwan’s economic security framework remains a core focus for DSET’s research and policy advocacy.
U.S. Expands Export Controls on Chinese Firms
Recently, the U.S. government added 140 Chinese companies to its export control entity list, including several chip manufacturers linked to Huawei, to curb China’s ability to develop advanced semiconductor technologies.
DSET has also published a report titled “Exposing Huawei’s Shadow Network: The Role of Shenzhen Major Industrial Investment Group and Taiwan Suppliers in China’s Semiconductor Strategy.” This report details how Huawei utilizes a shadow network to acquire international resources and technology, strengthening its semiconductor production capabilities.