Strategic Investment in China's Semiconductor Sector: Navigating Anti-Dumping Measures and U.S.-Japan Trade Tensions

The global semiconductor industry is at a pivotal crossroads, with China's escalating anti-dumping measures and retaliatory trade policies reshaping investment dynamics. As U.S. and Japanese import probes tighten access to advanced technologies, Chinese chipmakers are accelerating their pivot toward self-sufficiency, creating both risks and opportunities for investors. This analysis explores how strategic investments in domestic Chinese semiconductor firms-particularly those with verifiable growth metrics-can capitalize on the evolving geopolitical and economic landscape.

The Escalation of Trade Tensions and China's Retaliatory Measures

China's anti-dumping measures have intensified in response to U.S. and Japanese export controls. In 2023, China initiated WTO consultations against U.S. restrictions on advanced computing chips and manufacturing equipment, citing inconsistencies with World Trade Organization (WTO) rules. By 2025, the U.S. had announced plans to impose tariffs on Chinese semiconductors starting in 2027, a move China countered with retaliatory measures, including export controls on critical minerals like tungsten and tellurium. These actions reflect a broader pattern of economic coercion, with China leveraging its dominance in foundational semiconductor production- supplying 38% of U.S. imports for basic chips-to pressure global supply chains.

A temporary reprieve emerged in October 2025, when a U.S.-China trade agreement suspended retaliatory tariffs and rare-earth export controls. However, the agreement's one-year duration underscores the fragility of this détente. China has already signaled readiness to retaliate against U.S. chip tariffs, with potential countermeasures including anti-dumping investigations into U.S. semiconductor imports. For investors, this volatility highlights the need to focus on Chinese firms with robust domestic capabilities and state-backed growth trajectories.

Domestic Semiconductor Firms: Beneficiaries of Trade Restrictions

Chinese semiconductor companies have demonstrated resilience amid trade barriers, driven by state investment and strategic adaptation. The "Made in China 2025" initiative has been pivotal, with China-based firms capturing 33% of global wafer production capacity for foundational node logic chips in 2023, up from 19% in 2015. This growth is underpinned by a $47.5 billion industry support fund announced in 2024, which has spurred the construction of 18 new semiconductor fabrication plants-the highest number globally.

Case Study: Naura Technology's Surge in Market Share

Naura Technology Group exemplifies the opportunities within this landscape. In 2024, the company rose to sixth among global semiconductor equipment suppliers, becoming the only Chinese firm in the top ten. Its net profit surged 44.2% year-on-year, with revenue increasing 35.1% to 29.8 billion yuan, driven by demand for etching and deposition tools amid U.S. sanctions. By mid-2025, Naura's operating profit had outpaced South Korea's SEMES by eightfold, signaling its rapid ascent in the chip equipment market. Despite a projected 2025 market contraction due to over-purchasing in 2024, Naura's technological breakthroughs and domestic demand position it as a long-term beneficiary of U.S.-led trade restrictions.

SMIC's Strategic Adaptation

Semiconductor Manufacturing International Corporation (SMIC) faces more direct challenges from U.S. export controls, including restrictions on EUV lithography and advanced packaging technologies. However, SMIC has mitigated these risks through stockpiling and back-channel procurement of restricted equipment. While specific 2023–2025 financial data is limited, SMIC's ongoing collaboration with domestic chip developers and its role in Huawei's self-sufficiency efforts suggest a strategic pivot toward mature-node production, where China holds a 33% global capacity share.

Investment Implications and Risk Mitigation

The interplay of U.S.-Japan trade policies and China's retaliatory measures creates a dual-edged sword for investors. On one hand, export controls and tariffs threaten to disrupt supply chains and limit access to advanced technologies. On the other, they accelerate demand for domestic alternatives, particularly in foundational and industrial applications. For instance, China's 2025 semiconductor equipment market is forecasted to grow by 3.1% year-on-year, albeit at a slower pace than previous years.

Investors should prioritize firms with:
1. State-backed funding and production capacity (e.g., Naura's $47.5 billion industry fund support).
2. Diversified revenue streams in mature-node and application-specific markets, where China's self-sufficiency rate is rising.
3. Resilience to U.S. export controls, such as SMIC's reliance on domestic sourcing and Huawei's investment in EUV lithography.

However, risks remain. China's overall semiconductor self-sufficiency rate remains at 16%, far below the 70% target under Made in China 2025. Additionally, the U.S.-Japan-Netherlands alignment on export controls could further restrict access to critical equipment, necessitating scenario planning for supply chain vulnerabilities.

Conclusion

China's anti-dumping measures and retaliatory trade policies are reshaping the semiconductor landscape, creating both headwinds and opportunities. While U.S. and Japanese import probes aim to curb China's technological ascent, they inadvertently fuel domestic innovation and market consolidation. For investors, firms like Naura Technology and SMIC-backed by state investment and strategic adaptation-offer compelling long-term prospects. However, success will depend on navigating geopolitical uncertainties and leveraging China's growing dominance in foundational semiconductor production.