China Initiates Semiconductors Probes Ahead of Madrid Trade Talks

China has initiated two investigations into the U.S. semiconductor industry as trade discussions are set to begin in Madrid this week. The country’s Ministry of Commerce announced an anti-dumping investigation targeting specific analog integrated circuit (IC) chips imported from the United States. This inquiry will focus on commodity interface IC chips and gate driver IC chips, commonly produced by firms such as Texas Instruments and ON Semiconductor.

Additionally, a separate anti-discrimination investigation was launched concerning U.S. measures affecting China’s semiconductor sector. These actions come just days before U.S. Treasury Secretary Scott Bessent is scheduled to meet with Chinese Vice Premier He Lifeng in Madrid from March 10 to March 13, 2024.

The Ministry of Commerce emphasized that U.S. restrictions, including export controls and tariffs, are perceived as attempts to hinder China’s development in high-tech industries, particularly advanced computer chips and artificial intelligence. A spokesperson from the ministry stated, “These measures constitute the containment and suppression of China’s development.”

The timing of these probes follows the U.S. government’s recent decision to add 23 Chinese companies to its “entity list” due to allegations of activities that threaten U.S. national security and foreign policy interests. Among those listed are two companies accused of acquiring chipmaking equipment for SMIC, a leading Chinese semiconductor manufacturer.

As Bessent and He prepare for their meeting, they join a series of negotiations aimed at alleviating trade tensions between the two nations. Previous discussions occurred in Geneva, London, and Stockholm over the past year. Both governments have agreed to several 90-day pauses on escalating reciprocal tariffs, which have helped stave off a potential trade war.

Bessent characterized the discussions in Stockholm as “very fulsome,” highlighting the necessity to “de-risk” strategic industries such as rare earths, semiconductors, and medicines. He noted the importance of balancing the relationship between the U.S. and China.

Historically, the U.S. has imposed restrictions on China’s access to advanced semiconductors, a trend initiated during the administration of former President Donald Trump and continued under President Joe Biden. While the U.S. justifies these measures based on national security concerns, China argues that they are part of a broader strategy to contain its economic growth.

As the Madrid meetings approach, the outcomes of these discussions could significantly impact the semiconductor industry and broader trade relations between the two global powers.