China to Exempt Outsourced US Chipmakers from Retaliatory Tariffs
US semiconductor companies that outsource their manufacturing will not face China’s newly announced retaliatory tariffs, according to a notice released by China’s primary semiconductor industry body. The clarification comes as the chip industry faced uncertainty about how China’s countermeasures would apply, given the global complexity of semiconductor supply chains.
Reuters reports that the China Semiconductor Industry Association (CSIA), which represents the country’s leading chip companies, stated in an urgent message via its WeChat account that the point of wafer fabrication would determine the country of origin for all integrated circuits, whether they are packaged or not.
Chips Manufactured Abroad Get a Pass
For American chip designers like Qualcomm and AMD, which rely on outsourcing production to Taiwan’s TSMC, Chinese customs will regard their chips as originating from Taiwan, not the US, according to an analysis by EETop, a Chinese chip industry information platform. As a result, Chinese buyers of these chips will avoid paying China’s high retaliatory tariffs on US imports.
On the other hand, US chipmakers such as Intel, Texas Instruments, Analog Devices Inc. (ADI), and ON Semiconductor, all of which operate manufacturing facilities within the United States could see their products classified as US-made, subjecting them to tariffs of 84% or higher, EETop reported.
Beijing Escalates Tariff Measures
According to Reuters, China raised tariffs on US imports to as much as 125%, in response to US President Donald Trump’s earlier move to increase tariffs on Chinese products to 145%. Notably, EETop’s analysis of the impact on chipmakers was published prior to Beijing’s latest tariff escalation.
Following the CSIA’s announcement, Chinese semiconductor stocks surged, driven by clearer guidance on which US-linked chips would be affected by the tariffs.
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Potential Boost for China’s Domestic Chip Industry
He Hui, semiconductor research director at tech intelligence firm Omdia, highlighted that while some US-origin chips will still face heavy tariffs even if final assembly happens in China, the CSIA clarification offers much-needed transparency for the industry.
He also suggested that these developments could encourage global chip companies to adopt a "China for China" manufacturing approach, producing chips domestically within China to serve the Chinese market and bypassing tariffs entirely.
