China demands data as new rules risk shortage

Brace for rising regulatory pressure on chipmakers from both Beijing and Washington.

China’s Ministry of Commerce has launched a probe demanding extensive financial and operational disclosures from U.S. analog chip firms. At the same time, U.S. policymakers are advancing the GAIN AI Act. This proposed law would reintroduce strict domestic priority rules for AI chip distribution. The legislation would effectively constrain international sales channels for leading U.S. semiconductor companies, possibly harming the very ecosystem it wishes to build.

Political risk, now more than ever, directly intersects with supply chain management. Export controls and data-sharing mandates are reshaping how organizations manage sourcing strategies. For companies navigating this complex environment, flexibility and transparency are imperative for managing sudden disruptions.

China’s probe demands sensitive data from U.S. firms

China’s Ministry of Commerce has launched an aggressive anti-dumping investigation into several U.S. analog chip manufacturers. Though many see the inquiry as more political than procedural, it will require companies to submit detailed financial data comparing their product pricing and profitability in the Chinese market versus their home markets.  

Though no companies were publicly named, analysts say the scope of the investigation clearly targets key players such as Texas Instruments and Analog Devices. Other suppliers of essential analog components used widely in Chinese industrial and consumer electronics will likely fall under the same microscope.  

Those affected will have 37 days to submit responses to a sweeping questionnaire that demands disclosures on pricing structures, production costs, profit margins, and sales channels. Information is also requested on which raw materials suppliers U.S. firms are working with.  

The move marks one of the most expansive data requests Beijing has issued to date as part of its series of ongoing trade investigations.  

China has framed the probe as a standard anti-dumping measure, but experts argue it more closely resembles strategic posturing ahead of renewed U.S.-China trade negotiations. By invoking transparency in the name of fair trade, Beijing gains leverage while applying pressure on foreign firms deeply embedded in China’s value chains. At the same time, the inquiry creates uncertainty that could deter further Western investment in China’s tech sector.

For semiconductor manufacturers and buyers alike, the impact could cascade quickly. Analog chips might not grab headlines like GPUs and AI-class memory components, but they are foundational to industrial automation, automotive systems, and aerospace/defense infrastructure. These sectors leave little room for abrupt sourcing changes in the face of time-sensitive rollouts and qualification requirements.  

In volatile regulatory climates such as this, Sourceability’s multi-region supplier network and franchise portfolio enables buyers to pivot sourcing paths if access to China becomes constrained.  

The GAIN AI Act threatens U.S. competitiveness

As the global race for AI dominance rages on, U.S. lawmakers are preparing the Guarding American Innovation in AI (GAIN AI) Act. The bill is designed to prioritize domestic access to AI-related semiconductors and is framed as a national security measure. However, the controversial law, like similar legislation before it, could end up undercutting the global leadership of U.S. firms it aims to protect.

At its core, the GAIN AI Act would require chipmakers to prioritize domestic customers for AI chip products, giving them a right of first refusal on new orders. It would also require firms to obtain export licenses for shipments abroad. Notably, this restriction isn’t just targeting cutting-edge tech. It would also encompass older chips, the likes of Nvidia’s HGX G20, specifically designed for the Chinese market, and others not currently under export restrictions.

This move, if it becomes law, would effectively resurrect and expand certain elements of the controversial Diffusion Rule introduced during the final months of the Biden Administration. After significant industry backlash, that provision was shelved before it ever went into effect.

Supporters of the GAIN AI Act argue it is necessary to prevent leading U.S. AI chip capacity from being diverted to rival economies, particularly China and Russia. Critics, including many in the semiconductor sector, view it as regulatory overreach and latent protectionism that could choke global market access for U.S. firms.  

Indeed, one argument for the original Diffusion Rule was to cut off China’s access to AI chips. However, Beijing has rapidly expanded AI chip capacity over the past year. Regarding this, a recent CSIS piece claims, “Chinese makers of AI chips… are likely not only to meet domestic demand, but soon to compete head-to-head with U.S. chipmakers globally.”  

By introducing new licensing bureaucracy across a broad class of chips, the Act could also slow fulfillment timelines and introduce fresh legal ambiguity around compliance.  

Moreover, it’s unclear how the law would be enforced in practice. Without clear metrics on which chips qualify or which use cases are prioritized, companies may face a regulatory gray zone that leads to over-compliance, export delays, or missed revenue opportunities in key growth markets.

As global innovation increasingly depends on cross-border AI infrastructure, any measure that hampers commercial agility will hurt U.S. firms disproportionately. The Act’s restrictions may disincentivize innovation by reducing access to foreign markets, capital, and R&D collaborations.

While the GAIN AI Act is still in committee and far from becoming law, its emergence is a concerning development for the industry. Combined with China’s recent data demands, it reinforces the policy-driven fragmentation that now defines the global semiconductor market.

Going forward, companies that depend on unrestricted access to international markets will need to rethink how they manage licensing, compliance, and geographic exposure to safeguard their supply chains and production timelines.