The United States wants to impose tariffs on Chinese mature process chips

According to Reuters, the Office of the United States Trade Representative will hold a hearing on Chinese-made traditional chips, also known as basic or mature process chips, on March 11 local time. 

The United States has imposed a 50 percent tariff on polysilicon produced in China since January 1.

As early as December 23, the former Biden administration announced that it had asked the Office of the United States Trade Representative to launch a Section 301 investigation to examine China's targeting of traditional semiconductors as dominant and the impact on the U.S. economy.

The Section 301 investigation will initially focus on the manufacturing of traditional semiconductors in China, including their incorporation as components into downstream products in key industries such as defense, automotive, medical devices, aerospace, telecommunications, power generation, and power grids.

The investigation will also provide an initial assessment of whether the impact of China's actions, policies, and practices on the production of silicon carbide (SiC) substrates (or other wafers used as inputs for semiconductor manufacturing) will result in any unreasonable or discriminatory or burdensome or restricted restrictions on U.S. commerce.

It is worth noting that since last year, the performance of a number of mature process chip manufacturers in the United States has plummeted and triggered layoffs.

Wolfspeed, once a leader in silicon carbide wafers, has seen its share price fall 96 per cent in three years and cut 20 per cent of its workforce. Microchip, a U.S. microcontroller (MCU) giant, saw its revenue plunge 41.9% in the third quarter of fiscal year 2025 ended December 31, 2024 (Q4, 2024), and announced that it would close some factories and lay off employees this year. Us chip giant On Semiconductor's fiscal year 2024 GAAP net profit fell 32.5% year on year, announced fiscal year 2025 global layoffs of about 2,400 people.

These manufacturers are mature process chip manufacturers, although it can not be said that all the decline in performance and layoffs are mainly due to the decline in market demand, but the US government blamed it on the rapid development of China's mature process chip industry brought about by the price war impact.

In response, China's Ministry of Commerce said at the time that Chinese chips accounted for only 1.3 percent of the U.S. market. China's chip exports to the United States are far lower than imports from the United States. At the same time, we urge the US side to respect facts and multilateral rules and immediately stop its wrong practices. China will closely follow the progress of the investigation and will take all necessary measures to resolutely defend its rights and interests."

However, the Commerce Department also said in December that two-thirds of American products using Chinese chips use traditional Chinese chips, and half of American companies do not know the source of their chips, including some in the defense industry.

Apparently, the U.S. government does not intend to impose tariffs only on mature process chips imported directly from China to the United States, and may also plan to impose tariffs on end products imported into the United States using Chinese mature process chips.

But figuring out which end products use mature Chinese process chips, and how many, is a more complicated matter. As a result, the Trump administration may directly impose tariffs across the board on end-products made in China that usually use mature process chips, such as televisions, washing machines, cars and other household products.

It is reported that the "Section 301 investigation" against China's mature process semiconductors was launched by the Office of the United States Trade Representative on January 20 this year, and the results of the investigation have been handed over to the Trump administration.

Based on the findings, the Trump administration is likely to go further and begin imposing tariffs of up to 60 percent on Chinese semiconductor imports, as he has threatened. In mid-February, Trump said he could impose tariffs of about 25 percent on auto, semiconductor and drug imports, and could announce the news as early as April 2.

It is worth mentioning that on January 16 this year, China's Ministry of Commerce also plans to launch an investigation into low-priced chips imported from the United States with mature processes.

A spokesperson for the Ministry of Commerce said at the time: The domestic chip industry has reflected that for some time, the Biden administration has given a large number of subsidies to the chip industry, and US companies have thus obtained unfair competitive advantages and exported relevant mature process chip products to China at low prices, which has damaged the legitimate rights and interests of China's domestic industry. The concerns of China's domestic industries are normal, and they have the right to apply for trade remedy investigations. As for the applications and appeals of domestic industries, the investigation authorities will examine them in accordance with relevant Chinese laws and regulations and WTO rules, and will initiate investigations in accordance with the law.