China Investigates U.S. Chip Subsidies in New Trade Clash

China is investigating U.S. subsidies for its semiconductor sector, alleging these harm Chinese chipmakers. This marks a latest friction point amid ongoing trade tensions between the nations, highlighting Beijing's countermeasures against Washington's efforts to restrict China's semiconductor industry, which the Biden administration claims may strengthen China's military capabilities.

China has announced an investigation into U.S. government subsidies for its semiconductor industry, a decision the commerce ministry says is driven by concerns about harmful impacts on Chinese chipmakers. Mature node chips have been highlighted, distinct from advanced chips used in AI, as the investigation's focal point.

This move is seen as China's response to ongoing restrictions imposed by Washington on China's semiconductor sector. The Biden administration has been accused by Beijing of providing subsidies that offer U.S. companies an unfair advantage, particularly through the CHIPS and Science Act which allocates $52.7 billion to the semiconductor industry.

The repercussions of the probe are yet to be determined, but American companies like Intel, which supply mature node chips to China, may face consequences. Previous retaliatory actions by China included restrictions on rare earth metal exports and probes into U.S. firms suspected of violating anti-monopoly laws.

(With inputs from agencies.)