Last week, the Office of the United States Trade Representative issued a notice on December 23 stating the country would delay tariffs on Chinese chips until mid-2027, despite condemning Beijing's attempts to dominate semiconductor production as unreasonable and burdensome to American business
The notice stated that tariffs would remain at zero for 18 months, with an unspecified tariff increase set for June 2027.
This decision likely reflects an unspoken truce between Beijing and Washington, following Xi and Trump's meeting in Korea in October. While using forceful rhetoric on the surface, the main purpose of the announcement is actually to mitigate the short term impact on trade between the U.S. and China whileundermining Beijing's semiconductor industry over the long-term by encouraging U.S. companies to reduce purchases of Chinese chips.
U.S. efforts to restrict or cut off China's access toadvanced chip production equipment have so far succeeded in constraining Beijing's manufacturing capabilities, despite progress by domestic giants such as Huawei and SMIC.
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Around three-fourths of chips on the market are made by mature processes, with the rest being cutting-edge. Due to their cost-effectiveness and demand, mature process chips are used broadly across automotive electronics, smart appliances, sensors, industrial controls, medical equipment, and consumer electronics.
