Silverado Oral Testimony on USTR's Initiation of Section 301 Investigation

Silverado Policy Accelerator provided testimony to USTR on its Initiation of Section 301 Investigation: China’s Acts, Policies, and Practices Related to Targeting of the Semiconductor Industry for Dominance.

Key Takeaways
1. While US and allied measures have been aimed at controlling advanced technology, China has been doubling down on becoming the dominant player for "foundational" chips (also called legacy or mature), which accounted for about three-quarters of global production capacity in 2024.

2. China leads foundational chip production in the 20-180 nm node sizes (excluding memory), and is on track to install three times as much capacity during 2024-2027 as any other country. This is being fueled by the CCP's largely unchecked non-market industrial policies.

3. Ceding the foundational chip market to China means that it has control over whether items are ultimately built – it can hold back its supply from the US and the rest of the world. It can depress prices to gain market share from U.S. companies. It can use this leverage to push back on US measures to prevent IP theft and technology transfer of advanced nodes.

4. Section 301 is an important trade tool to counter China’s unfair, unreasonable, and discriminatory practices and allow the U.S. to compete on a fair footing. It can be used most effectively by covering not only imports of wafers, but Chinese designed and fabricated semiconductors that are a component in another product, i.e., component tariffs.

5. Designing a component tariff system is viable and can be done by working with industry partners. It must also be coupled with measures to promote U.S.-manufactured chips.