Chip trade probe continues amid security concerns

Rapidly evolving security probes and reviews are reshaping the semiconductor landscape.

The semiconductor industry is entering a new phase of geopolitical and regulatory scrutiny. In Washington, the U.S. Commerce Department is advancing a Section 232 national security probe into semiconductor and pharmaceutical imports. The move could open the door to sweeping new tariffs that may disrupt global supply chains and harm U.S. companies under the banner of protecting domestic tech manufacturing.  

Across the Atlantic, the European Commission achieved a stabilizing trade framework with the U.S., capping duties at 15% and securing zero-for-zero tariff treatment for strategic goods like semiconductor fab equipment.  

Meanwhile, in Beijing, China’s Cyberspace Administration has summoned Nvidia to clarify whether its flagship H20 AI chips contain hidden access points, reflecting the country’s growing scrutiny of foreign hardware amid intensifying U.S.-China technology competition.

U.S. and EU probe chip imports

U.S. Commerce Secretary Howard Lutnick has announced that the results of a new Section 232 national security probe into semiconductor and pharmaceutical imports will be released within two weeks. The news is significant for the chip industry, as it likely signals the arrival of new tariffs.  

The Trump administration has held firm to its stance that the investigation is the first step in reinvigorating domestic manufacturing in the targeted sectors. However, the resulting tariffs are likely to put immense short-term pressure on the industry given the lengthy time horizons of new fab buildouts.  

Notably, this investigation isn’t the first of the Trump presidency. Previously, Section 232 actions resulted in steep new tariffs on strategic targets including steel, aluminum, and automobiles.  

For the chip sector, the stakes are substantial. A broadly applied tariff regime that specifically targets semiconductors could reshape cost structures across downstream industries from consumer electronics to industrial automation. It would also constrain supply, particularly of advanced node chips that U.S. fabs cannot yet produce at scale.  

Large players with existing U.S. manufacturing footprints or investments, like TSMC and Samsung, may qualify for preferential treatment—though none has yet been confirmed. Smaller firms and niche device makers will likely suffer the harshest impact.  

On the same day Washington announced the imminent conclusion of its Section 232 probe, the EU made a move of its own to curb market volatility. EU President Ursula von der Leyen unveiled a new U.S.-EU trade framework that caps tariffs at 15% across most sectors. It also enforces a “no stacking” rule to prevent compound duties, which brings much-needed clarity to exporters.

Meanwhile, the new deal extends zero-for-zero tariff relief provisions to strategic goods, including semiconductor fab equipment. This concession ensures that transatlantic flows of lithography systems, deposition tools, and other capital-intensive assets remain uninterrupted. For a supply chain constantly in turmoil, the move is an important safeguard that adds another layer of security.  

Chip leaders should be aware of these developments, keeping a close eye on the results of the Commerce Department’s probe. Even though the EU’s new framework offers a predictable premium for stability, these provisions can change quickly if trade tensions rise.  

Sourceability can help semiconductor firms navigate emerging tariff regimes by helping customers identify alternative sourcing options in lower-risk jurisdictions to ensure compliance and uninterrupted supply. With tariff decisions being made on a rapid-fire timeline, agility and data-driven supply chain mapping will be decisive competitive advantages in the months to come.

Nvidia addresses chip security concerns

Amid ongoing international tensions, China’s internet regulator, the Cyberspace Administration of China, raised concerns about the security of Nvidia’s H20 AI accelerator chip. The agency summoned Nvidia to explain whether its chips might contain “hidden access points” capable of enabling remote control or unauthorized data extraction. Such features—often referred to as backdoors—would be considered critical security vulnerabilities under Beijing’s cybersecurity framework.  

In response, Nvidia issued an unequivocal denial of the allegations, stating that its chips contain no backdoors and that it does not build, enable, or authorize any remote access functions. The public rebuttal comes in the wake of Nvidia CEO Jensen Huang’s highly publicized visit to Beijing last month.  

The scrutiny, understandable given the growing importance of trust in high-performance hardware central to national AI infrastructure, comes at a delicate moment. Earlier this year, the U.S. government banned exports of the H20 to China before promptly reversing the decision.

Meanwhile, lawmakers in Washington are drafting proposals that would require chipmakers to bake location verification features into their advanced chips destined for foreign markets. They claim the measure is necessary to ensure strategic hardware does not end up in sanctioned jurisdictions.  

The move comes after nearly three million restricted TSMC AI chips made their way to Huawei after being purchased by a third-party firm named Sophgo. Though no requirements have been codified, their drafting signals a policy trajectory toward greater traceability and in-field monitoring.  

For Nvidia, the Chinese probe is only one regulatory front. The company is also facing an antitrust investigation in China, part of a broader pattern of scrutiny as Beijing tightens its grip on foreign technology suppliers. Regardless of the outcome, such actions can slow market access, complicate sales cycles, and add compliance overhead for affected players.  

As export controls and regulatory reviews increase across major markets, chipmakers must respond by diversifying their supply bases and investing in domestic production hubs. High-value chips, particularly with AI applications, will now almost certainly face multi-layered inspections in major economies before approval. Likewise, policy reversals like the H20’s export reinstatement show that compliance strategies must be dynamic, with rapid response capabilities built into supply chain operations.

By leveraging Sourceability’s end-to-end traceability platform, semiconductor firms can verify compliance with evolving security mandates and adapt export documentation in real time. When security reviews can delay shipments by months, having a verifiable, tamper-proof compliance record is a necessity for sustained market access.