China has clarified that its recent tariffs on imported chips will apply only to those manufactured in the United States, while chips produced in the Taiwan region and South Korea are exempt. The China Semiconductor Industry Association (CSIA) announced on Friday that the “country of origin” for integrated circuits will be determined by the location of the wafer fabrication facility (fab), not by where the chips are designed or packaged.
This clarification means that chips such as AMD CPUs and Nvidia GPUs manufactured in the Taiwan region will not be subject to the new tariffs, even though they are designed by U.S. companies. However, chips produced in U.S.-based fabs by companies like Intel and Texas Instruments will face increased duties.
Following the announcement, shares of AMD and Nvidia rose by 6% and 2.6% respectively, while Qualcomm saw a 1.1% increase. In contrast, Intel’s shares fell by more than 6%.
Industry experts believe that this move could benefit China’s domestic chipmaking sector. He Hui, semiconductor research director at tech research company Omdia, said, “The notice from CSIA helps distinguish which U.S. chips will be hit with tariffs. It is clear that some chips made in the U.S. will still be taxed even if they are packaged in China.”
He added that this could encourage foreign semiconductor firms to adopt a “China for China” strategy—manufacturing products for the Chinese market within China—to avoid tariffs.
Analysts from Bernstein told Reuters that the CSIA’s clarification came as a surprise to the market, as investors generally considered the location of packaging to determine the country of origin, not the fab. They noted that shifting fabrication facilities is far more complex than changing packaging locations.
With trade tensions between China and the United States escalating, such clarifications provide crucial information for global semiconductor companies navigating the complex landscape of international trade policies.
