China’s Chip Strategy: A New Trade War Tactic
▼ Summary
– China launched an anti-dumping investigation into American legacy chips, potentially leading to tariffs that reduce their competitiveness.
– Chinese regulators took antitrust action against Nvidia and instructed companies to stop buying its latest chips, targeting US semiconductor firms.
– Beijing’s recent regulatory moves represent a shift from defense to offense in the tech war, mirroring tactics previously used by the US.
– These actions are timed to provide leverage in negotiations over TikTok and to seek concessions on tariffs or export controls.
– China is leveraging its massive domestic market as a new bargaining chip, weaponizing access to counter US technological advantages.
While global attention focused on the TikTok negotiations last weekend, Chinese officials quietly introduced a new element into the trade discussions, semiconductors. Over the past week, Beijing has rolled out a series of regulatory measures aimed squarely at U.S. chip manufacturers, signaling a strategic shift in how it approaches economic disputes with Washington.
The most notable action involves an anti-dumping investigation into American-made legacy chips, which are fundamental components in automobiles, home appliances, and data centers. Although these chips don’t attract the same attention as advanced processors, they form the backbone of everyday electronics. Chinese firms have now reached production parity in this sector, allowing regulators to claim that U.S. companies are saturating the market with unfairly priced products. This opens the door for potential tariffs that could diminish the competitiveness of American exports.
Simultaneously, antitrust proceedings were initiated against Nvidia. Chinese authorities indicated the company may have breached commitments made during its 2020 purchase of Mellanox, an Israeli tech firm. Shortly after, major Chinese tech corporations including ByteDance and Alibaba received instructions to halt purchases of Nvidia’s newest chips. Beijing also launched an inquiry into U.S. industrial policy, arguing that subsidies and tariffs under the CHIPS Act give firms like Intel an unjust advantage.
This represents a noticeable reversal in the tech conflict between the two nations. For years, the U.S. has employed export restrictions, investment screens, and sanctions to limit China’s advancement in semiconductor technology. Now, China is demonstrating it can employ similar tactics. These regulatory threats may serve as leverage in broader negotiations, including those concerning TikTok and tariff reductions.
As one analyst noted, China has closely observed U.S. strategies and is now responding with growing confidence and tactical precision. The timing of these actions is strategic, aligning with ongoing talks about TikTok’s operational future in the U.S. While American officials focus on data security and ownership, Chinese leaders appear more interested in securing concessions in strategic sectors like semiconductors.
Semiconductors have become central to geopolitical competition, especially with the rising importance of artificial intelligence and large language models. Beijing’s latest moves highlight a shift in strategy: rather than competing solely on technological innovation, China is leveraging its enormous domestic market as a bargaining tool. Where the U.S. dominates in areas like lithography equipment and GPU design, China holds sway as the world’s largest consumer of certain technologies, including automotive chips. By threatening market access, China is adopting a tactic famously used by the U.S., weaponizing economic interdependence.
(Source: Wired)
