Biden's New Chip Probe: A Boon for U.S. Semiconductor Stocks

The Biden administration's recent announcement of a new probe into Chinese semiconductors has sent shockwaves through the global tech industry, with U.S. semiconductor stocks gaining momentum. The investigation, launched under Section 301 of the Trade Act of 1974, aims to examine China's non-market acts, policies, and practices in the semiconductor sector. This move could lead to additional tariffs on older Chinese chips, which are widely used in various industries like defense, automotive, and telecommunications.

The White House alleges that China's state-driven expansion enables its companies to offer chips at artificially lower prices, harming U.S. competition. If the investigation finds evidence to support these claims, it could result in tariffs or other trade restrictions, challenging the current dynamics of the semiconductor market. U.S. semiconductor companies, such as Broadcom, AMD, and Marvell Technology, have seen gains in their stock prices following the announcement, with ETFs tracking the sector also rising.



The probe raises concerns about potential disruptions to global chip supply chains, as China is estimated to supply up to 50% of new global capacity for mature process chips in the next three to five years. However, the investigation could also present opportunities for U.S. companies to increase their market share and improve their profit margins. The Biden administration's actions, including the CHIPS and Science Act funding and the Section 301 investigation, aim to protect American workers and businesses by supporting a healthy domestic industry for foundational semiconductors and reducing national security risks in federal supply chains.



The U.S. government's efforts to boost domestic semiconductor production, such as the CHIPS and Science Act, aim to mitigate the economic consequences of new tariffs on Chinese semiconductors. By investing in domestic manufacturing, the U.S. can reduce its dependence on foreign suppliers, enhance supply chain resilience, and create jobs. For instance, Samsung's $37 billion investment in Texas, supported by the CHIPS Incentives Program, is expected to create over 15,000 jobs. Additionally, the Biden administration's initiatives to clean up federal procurement of semiconductors and prioritize supply chain resilience will help ensure secure and trusted chips for U.S. critical infrastructure.

In conclusion, the Biden administration's new probe into Chinese semiconductors has the potential to reshape the global semiconductor market and create opportunities for U.S. companies. While the investigation may lead to supply chain disruptions and increased competition, it also presents an opportunity for U.S. semiconductor producers to strengthen their market position and improve their profit margins. As the investigation unfolds, investors should closely monitor the developments and consider the potential long-term implications for U.S. semiconductor stocks.