The United States is exploring the possibility of imposing trade tariffs on certain semiconductor imports from China. This move is in response to concerns over the influx of older-generation computer chips, which are perceived to pose an economic threat due to their affordability. The issue traces back to the Trump Administration’s actions against Huawei Technologies, a major Chinese telecommunications company, which resulted in China being denied access to advanced chip-making technologies from the West.
As a result, China has increased the production and export of semiconductors based on older chip architectures. According to Asia Nikkei, a U.S. House Committee has expressed concerns over the potential impact of these Chinese-made foundational semiconductors on the U.S. market and global semiconductor supply. The committee has reportedly sent a joint letter to U.S. trade representatives, advocating for measures to reduce reliance on these imports, including the consideration of trade tariffs. The report highlights that smaller, more advanced computer chips, which are 8 nanometers or smaller, are predominantly manufactured in Taiwan and South Korea.
In contrast, the older and larger chips (28 nm or larger) are the ones being produced in greater volume by China. In addition to considering tariffs, the U.S. is expected to consult with allies, including Australia, on this matter. The focus is on balancing the economic implications of cheaper older-generation chips against the need to maintain technological leadership and economic security. Meanwhile, Nvidia, a leading U.S. artificial intelligence chip maker, is reportedly preparing to mass-produce AI processors for the Chinese market, adhering to U.S. export regulations. Despite being cutting-edge technology, there is speculation that Chinese companies might prefer local alternatives if they perceive Nvidia’s offerings as not being the most advanced available.
Reuters notes that Nvidia’s share price has shown significant growth, rising from US$118 in October 2022 to almost US$500 in December 2023, reflecting its position in the high-end semiconductor market.
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