On April 1, the US Secretary of Commerce initiated a section 232 “national security” investigation, “to determine the effects on national security of imports of semiconductors, semiconductor manufacturing equipment (SME), and their derivative products. This includes, among other things, semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics, and SME components. Derivative products include downstream products that contain semiconductors, such as those that make up the electronics supply chain.”
Read the notice here.
The investigation will be conducted under Section 232 of the Trade Expansion Act of 1962, as amended. This provision has previously been used by the Trump Administration to impose additional duties on imports of steel and aluminum.
Commerce is inviting public comments to be filed on or before May 7, pertaining to:
- The current and projected demand for semiconductors (including as embedded in downstream products) and SME in the United States, differentiated by product type and node size.
- The extent to which domestic production of semiconductors can or is expected to be able to meet domestic demand at each node size for each product type, and similarly the extent to which domestic production of SME can or is expected to be able to meet domestic demand.
- The role of foreign fabrication and assembly, test and packaging facilities in meeting US semiconductor demand, and similarly the role of foreign supply of SME in meeting domestic demand.
- The concentration of US semiconductor imports (including as embedded in downstream products) from a small number of fabrication facilities and the associated risks, and similarly the concentration of US SME imports from a small number of foreign sources.
- The impact of foreign government subsidies and predatory trade practices on US semiconductor and SME industry competitiveness.
- The economic or financial impact of artificially suppressed semiconductor and SME prices due to foreign unfair trade practices and state-sponsored over-capacity.
- The potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over semiconductors and SME supply chains.
- The feasibility of increasing domestic semiconductor capacity (in different product types and node sizes) to reduce import reliance, and similarly the feasibility of increasing domestic SME capacity to reduce import reliance.
- The impact of current trade and other policies on domestic semiconductor and SME production and capacity, and whether additional measures, including tariffs or quotas, are necessary to protect national security.
- What product types and node sizes could be built only using SME from US companies.
- What SME is manufactured abroad and faces limited competition from US-made products.
- What SME parts or components are only available outside the United States.
- Where the US workforce faces a talent gap in production of semiconductors, SME, or SME components.
- Any other relevant factors.
The report from Commerce is to be delivered to the president within 270 days of initiation of the investigation and will focus on whether imports of semiconductors, SME, and their derivative products are in such quantities or under such circumstances as to threaten to impair the national security, though the Commerce Secretary has indicated that it may be delivered much sooner. Additionally, the report may also include Commerce’s policy recommendations for strengthening the supply chain through strategic investments. The president can concur or not with the Commerce Secretary’s recommendations and take action to adjust the imports (such as tariffs, quotas, or a combination of the two measures) or other non-trade related actions as deemed necessary.
In the past, where Section 232 duties have been implemented, the rate of duty has been in addition to any other duties, fees, exactions, and charges applicable, including antidumping and countervailing duties.
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