The move aims to reduce reliance on Chinese technology that U.S. officials see as a national security threat, and will focus on older-model chips and the products that use them, such as medical devices, vehicles, smartphones, and weaponry, the Bloomberg report stated citing sources familiar with the matter.

The investigation will be carried out under Section 301 of U.S. trade law and will examine unfair trade practices.

This investigation could pave the way for further trade restrictions to protect U.S. manufacturing in an increasingly competitive global semiconductor market, according to the report.

However, any policy decisions based on the findings are likely to fall to President-elect Donald Trump’s incoming administration, Bloomberg reported.

The report notes that while Biden administration officials have debated the decision for months, a consensus was recently reached to move forward with the inquiry.

However, Hong Kong-listed shares of Semiconductor Manufacturing International Corp (HK:0981) (SMIC) were up 1.4%, while Hua Hong Semiconductor Ltd (HK:1347) gained 1.5%.

Broader Chinese markets were also up, with the Shanghai Composite index rising 0.7%, and Shanghai Shenzhen CSI 300 gaining 0.6%. Hong Kong’s Hang Seng index jumped 1%.

Reuters reported on Tuesday that Beijing will raise its budget deficit to 4% from 3% of gross domestic product in 2025- its highest on record, and will also target GDP growth of 5% for a third consecutive year.