(Bloomberg) -- China will investigate allegations that the US dumps lower-end chips and unfairly subsidizes its own chipmakers, in potentially one of Beijing’s strongest retaliatory moves against American technology sanctions.
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The government will look into the question of whether the US is giving its chipmakers an unfair advantage through incentives and grants, or illegally undercutting Chinese products, the Commerce Ministry said in a statement Thursday. The probe was begun in response to protests from local industry players, the agency said.
Chinese chipmakers have complained about the US Chips Act, which provides funding of some $39 billion to entice firms like Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co. to build high-end chipmaking capacity in America. On Thursday, China’s chip industry body took aim at a cornerstone of the Biden administration’s policy.
“The US Chips and Science Act violates the fundamental principles of a market economy and caused profound and significant impact on the global semiconductor supply chain,” the China Semiconductor Industry Association said in a WeChat statement.
The Commerce Ministry didn’t name any company, but several US firms including Texas Instruments Inc. and Analog Devices Inc. rank among the leaders in lower-end products such as power and analog chips. Those are ubiquitous in modern devices from cars to appliances, helping regulate power flows or translate digital signals.
Beijing’s investigation echoes a longstanding US complaint, that China’s government openly bankrolls its domestic firms in contravention of global trade agreements. US and European officials have also warned of the risk that Chinese companies, which’re building capacity in mature nodes at a rapid clip, could eventually flood global markets with cheap chips.
It’s unclear what the consequences could be for any company found violating antitrust or anti-dumping regulations. The government could impose higher or company-specific tariffs, depending on its findings. Beijing has also in the past threatened US companies with either product bans or hefty fines.
Qualcomm Inc. a decade ago changed some of its key business and licensing practices and paid up a 6 billion yuan ($975 million) fine to put an end to a yearlong antitrust case. Micron Technology Inc. warned in 2023 that about half of its sales tied to China-headquartered clients may be affected by a cybersecurity probe being carried out by the Chinese government.