The Biden administration could be preparing to launch a trade investigation into China’s production of legacy chips, according to an exclusive New York Times report. This move responds to concerns that the increasing U.S. reliance on Chinese chips could pose a national security risk, according to government and industry sources cited in the report.
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Investigation Could Lead to Tariffs or Import Bans
The investigation, which could begin in the coming weeks, may result in tariffs, import bans, or other trade measures against certain Chinese chips and products. However, the incoming U.S. administration would ultimately decide the course of action, as the investigation is expected to take at least six months to conclude.
Why Is the U.S. Investigating Legacy Chips?
Older semiconductors, often called “legacy” or “foundational” chips, are essential for a wide range of products, including smartphones, vehicles, appliances, and weaponry. However, China’s aggressive investments in building new factories to produce these chips have left U.S. officials worried that these investments could drive U.S. and allied chipmakers out of business.
As a result, the U.S. could become increasingly dependent on China for these chips. Additionally, this dependency could raise cybersecurity concerns as Chinese chips are integrated into American infrastructure and defense systems.
The Biden administration has been trying to boost domestic chip production under its CHIPS Act. Considering this scenario, pressure is building on the U.S. government to protect domestic chipmakers and supply chains.
What Is the Best Chip Stock to Buy?
For investors interested in the semiconductor sector, we have rounded up the best chip stocks that Wall Street analysts may be bullish or cautiously optimistic about using the TipRanks Stocks Comparison tool. From this comparison, it appears that analysts are bullish on Broadcom (AVGO), Nvidia (NVDA), and TSMC (TSM).
