Why Did China Launch a Chip Probe Right Before US Trade Talks?

On Saturday, China began an anti-dumping investigation into US analog integrated circuits, intensifying tensions between the world’s two largest economies just ahead of high-stakes trade talks in Madrid.

The announcement came as officials prepared for a new round of negotiations that will address urgent economic and security issues affecting both nations.

The timing intensified scrutiny over upcoming diplomatic exchanges and could influence the shape and urgency of the discussions.

The probe was formally requested by the Jiangsu Semiconductor Industry Association and will assess whether American chipmakers are exporting their analog chips to China at prices below fair market value.

This is a practice known as dumping, which can hurt local Chinese industries by driving down prices and harming domestic manufacturers.

What Sparked China's Analog Chip Investigation?

The formal request from the Jiangsu Semiconductor Industry Association in July triggered China’s Ministry of Commerce to launch an investigation into US analog chip imports just one day before crucial talks.

The association represents domestic companies who claimed that US chip pricing has damaged local operations and undermined market fairness. China said the investigation’s scope will cover imports during all of 2024, as well as an injury review spanning back to 2022.

China's anti-discrimination investigation was announced at the same time, deepening the focus on semiconductor relations between the two powers.

According to initial findings, US analog chip import volumes rose by 37 percent from 2022 to 2024, while import prices fell by 52 percent in that period, prompting concerns over significant competitive harm to Chinese manufacturers.

Did you know?
Analog chips process signals from the real world, including sound and light, and represent a core technology in everyday electronics such as medical devices and automotive safety systems.

How Does the Probe Affect Ongoing and Upcoming Trade Talks?

The probe’s timing puts US negotiators on alert as Treasury Secretary Scott Bessent meets Chinese Vice Premier He Lifeng on September 15 for four days of technical and political discussions in Madrid.

These will include talks on strategic economic sectors, tariffs, export controls, TikTok, and efforts to disrupt international money-laundering networks.

The investigation adds another layer of complexity to already tense trade relations, making consensus at the negotiating table more difficult to reach.

The Madrid talks follow earlier rounds in London, Geneva, and Stockholm, all aimed at extending the tariff truce currently in place.

Both sides face a deadline on November 10, after which triple-digit tariffs could snap back on hundreds of billions in trade.

The launch of the chip probe signals that China sees the semiconductor sector as far from resolved.

Is This Move Part of a Wider Pattern in US-China Tech Disputes?

Semiconductors have become the centerpiece of the broader rivalry between Washington and Beijing. The US has placed strict export controls on advanced chip technology bound for China, citing national security risks.

In retaliation, China has strengthened its reviews of American electronics imports and ramped up domestic tech investment.

The new probe fits into a pattern of both sides using regulatory leverage and market access restrictions to advance their technology agendas.

Additional disputes have flared around Chinese access to American chipmaking equipment and US penalties on Chinese firms tied to strategic industries.

Both countries have imposed tariffs at various stages since 2018, with extensions negotiated to prevent a full-scale trade war.

The chip investigation highlights just how intertwined strategic industry policy and trade negotiation have become.

ALSO READ | How Did Johns Hopkins Make Microchips Invisible to the Human Eye?

What Evidence Led to the Anti-Dumping Claim?

Chinese officials cited sharp increases in import volume and steep declines in US chip prices over the past two years as grounds for their anti-dumping claim.

From 2022 through 2024, US chip shipments to China climbed by nearly 40 percent, while average prices fell by more than half.

Beijing argues these dynamics led to suppressed revenues and production disruptions for Chinese firms, prompting formal legal action under domestic trade law.

The Ministry of Commerce will examine import pricing from January to December 2024 and review alleged industry harm between January 2022 and December 2024.

Their findings may influence new duties or import restrictions if dumping is substantiated. The probe can be extended by six months past the typical 18-month timeline should further evaluation be deemed necessary.

What Could Happen Next for US-China Semiconductor Trade?

The investigation will continue until September 2026, but future trade negotiations could influence its conclusion. With both economies seeking stability and supply chain resilience heading into the November tariff deadline, semiconductor policy has become pivotal for future cooperation.

The US maintains strict barriers on advanced tech, while China grows more assertive in protecting its chip industry from foreign price pressures.

If both sides prioritize agreement over escalation, a lasting deal on semiconductor trade could emerge.

Without compromise, divisions over chip access and pricing may trigger renewed tariffs or regulatory isolation, posing risks for global electronics production and innovation.

Stakeholders around the world will monitor the Madrid discussions closely as the next chapter of US-China tech relations unfolds.