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Arthur T Knackerbracket [soylentnews.org] writes:

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Arthur T Knackerbracket has processed the following story [tomshardware.com]:

China's tactic of flooding the market with chips made using legacy nodes is under investigation by U.S. government.

Although China cannot flood the global market with chips produced with cutting-edge fabrication technologies, strong subsidies for the semiconductor sector in China make it possible for the country to flood the market with chips made on legacy process technologies, thus undercutting much-needed sales that generate revenue that is vital for R&D at Western firms. This tactic could spur the U.S. government to impose tariffs on products using mature processing nodes, reports Bloomberg [bloomberg.com].

The U.S. Commerce Department's Bureau of Industry and Security [tomshardware.com] is set to survey over 100 companies in sectors like automotive, aerospace, and defense to figure out how much the U.S. relies on the older but essential semiconductors made in China. The survey is designed to find out how chips made on legacy process technologies (e.g., 40nm and older), which are still important for various industries, are bought and used by American companies.

China is known for providing hefty funds to its chipmakers. For example, China-based SMIC invested $24 billion in capital expenditures from 2020 to 2023 with support from banks, local governments, and state-controlled funds, far exceeding its earnings in the period, according to Nikkei [nikkei.com]. Other semiconductor companies also have generous support from the government, which is how they can quickly expand production capacity using tools that they can procure without any limitations and start producing chips like display driver ICs (DDICs) or power management ICs (PMICs) that are sold in billions of units every year.

This situation isn't unnoticed by the U.S. Commerce Department as China ramps up its production of these so-called legacy chips, making it tough for U.S. companies to keep up. The U.S. government is formulating a strategy to counteract this tactic, and tariffs are definitely on the table.

The survey's findings are set to guide the U.S. in formulating responses that could include the imposition of tariffs or the use of other trade tools to counteract China's aggressive expansion in the semiconductor industry. Commerce Secretary Gina Raimondo has already indicated that the U.S. is ready to use every tool it has to stop China from flooding the market with low-cost legacy chips. However, she clarified that the most stringent export controls would remain reserved for more advanced process technologies and not for these older generation nodes, so Chinese companies will still be able to procure legacy chipmaking tools.

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