China’s semiconductor industry, locked in a tariff war with the United States, has launched a new strategy. It will now classify imported semiconductors based on the location where the wafers are produced.
This move could impose tariffs on U.S. chipmakers and harm the Trump administration’s efforts to revive domestic semiconductor production.
Industry sources said on Tuesday that the China Semiconductor Industry Association (CSIA) recently pushed to define a semiconductor’s origin based on the last substantial transformation. This means all integrated circuit products must list their origin based on where the wafers are made, even if the chips go through later packaging.
If sent to China, this announcement could lead to high tariffs on chips made in U.S. fabs (semiconductor manufacturing facilities).
Analysts expect top U.S. semiconductor firms like Intel, Texas Instruments, GlobalFoundries, and Microchip Technology to suffer the most.
However, some experts say the immediate impact may be limited since most chips imported by China are not made or shipped from the U.S.
Fabless companies like NVIDIA, Qualcomm, and AMD, which depend on Taiwan’s TSMC for chip production, will likely face less impact since most advanced chips are made in Taiwan.
This Chinese move could damage U.S. semiconductor investments, especially as the Trump administration uses tariffs to grow domestic chip production. If China imposes tariffs on semiconductors, Taiwan’s TSMC may need to reconsider its planned investments in the U.S.
Some analysts say Chinese foundry companies could gain an advantage from this situation.
After the CSIA announcement, shares of China’s largest foundry, Semiconductor Manufacturing International Corporation (SMIC), rose 5.9% on the Hong Kong Stock Exchange. Hua Hong Semiconductor saw a sharp jump of 14%.
IC Wise, a semiconductor market research firm, said President Donald Trump’s tariffs fail to achieve their original “Make America Great Again” goal and instead risk pushing the U.S. back toward outsourcing.
