In a significant move that underscores growing trade tensions, China has initiated two separate investigations into the American semiconductor industry. These probes, announced shortly before scheduled high-level trade discussions between the two nations, highlight the increasing friction in the critical technology sector. The investigations are perceived by many as a direct response to recent U.S. actions targeting Chinese tech companies.
The first of China's probes is an anti-dumping investigation specifically targeting certain analog chips produced in the United States. This category of chips is vital for numerous electronic applications and is a key product for American companies like Texas Instruments and Analog Devices. An anti-dumping inquiry assesses whether foreign products are being sold at unfairly low prices, potentially harming domestic industries.
Concurrently, China's Ministry of Commerce announced a broader investigation into the United States' policies concerning integrated circuits. This includes examining various restrictions and prohibitions imposed by the U.S. in recent years, such as Section 301 investigations and export control measures. A spokesperson indicated that these actions aim to scrutinize the impact of these U.S. policies on the global semiconductor supply chain and China's own technological development.
These Chinese investigations come on the heels of the U.S. Commerce Department's decision to add 23 more Chinese companies to its trade restriction list. Among these were two Chinese chip manufacturers, now facing limitations on their access to American chipmaking equipment. Furthermore, the U.S. has previously implemented stringent export controls on advanced chips and related equipment destined for China, particularly impacting AI chips from industry leaders such as Nvidia and Advanced Micro Devices.
Despite the broader restrictions, there have been some exceptions. Notably, the Trump administration recently approved Nvidia's sale of H20 AI chips to China. However, this particular deal has faced complexities, with Beijing reportedly encouraging Chinese firms to avoid purchasing the H20. This chip model was specifically engineered to operate with reduced power, adhering to U.S. export regulations, which suggests China's preference for more powerful, unrestricted technology.
The timing of these probes is particularly significant, occurring just days before U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are slated to meet in Madrid for trade talks from September 14-17. These high-stakes discussions are expected to cover a range of contentious issues beyond semiconductors, including existing tariffs, export controls, the status of TikTok, and concerns around money laundering, setting the stage for potentially fraught negotiations.
In response to the escalating trade tensions, the stock market has shown varied reactions. Analog Devices saw a slight dip in its stock value, falling 0.75% last week and dropping below a key buy point. Texas Instruments also experienced a decline of 2.8%, with its stock now below all its moving averages. Conversely, Nvidia's stock demonstrated resilience, jumping 6.5% last week and regaining its 50-day moving average, signaling potential for a flat base formation. Advanced Micro Devices also saw a 4.9% increase, though it has yet to decisively cross its 50-day line, which would indicate a stronger upward trend.
The recent actions from Beijing, involving targeted inquiries into U.S. chip manufacturing, highlight the deepening technological competition between the two economic powerhouses. This strategic move by China, preceding crucial trade dialogues, signals its intent to push back against American tech restrictions while simultaneously laying the groundwork for complex discussions on a variety of economic and technological fronts.