Investing.com — U.S. semiconductor stocks were mostly modestly higher in premarket trading Tuesday after the Biden administration launched a new trade investigation into legacy semiconductors made in China.
The investigation, initiated under Section 301 of the Trade Act of 1974, could lead to additional tariffs on old Chinese chips used in everyday products such as cars, washing machines and communications equipment.
Semiconductor companies like Broadcom (NASDAQ:), AMD (NASDAQ:), and Marvell (NASDAQ:) Technology rose about 1.8%, 1.8%, and 0.4%, respectively. Meanwhile, ETFs that track the sector, such as SOXX and SMH, rose 0.3% and 0.2%, respectively. Micron (NASDAQ:) also posted a modest gain of 0.1%, while Nvidia (NASDAQ:) and Taiwan Semiconductor posted modest declines of 0.3% and 0.8%.
The investigation is aimed at protecting U.S. semiconductor makers from China’s state-led expansion of its chip industry, which has allowed Chinese companies to offer chips at artificially low prices.
U.S. Trade Representative Katherine Tai said the investigation will help protect competition in the U.S. market and prevent China from dominating the global semiconductor market.
The investigation is expected to be completed under President-elect Donald Trump’s administration, but if the Biden administration decides to begin now, it could result in new tariffs on Chinese semiconductors.
These duties will be in addition to the 50% tariff on Chinese chips scheduled to go into effect on January 1st.
According to Reuters, China’s Ministry of Commerce said the investigation had raised concerns about the potential for disruption to the global chip supply chain.
