A visitor checks out a booth displaying chips made for autonomous electric cars at an auto show in Shanghai. (Photo provided to China Daily)
The China Semiconductor Industry Association on Friday clarified regulations governing the origin determination of semiconductors for import declarations, impacting U.S. chip makers that have domestic plants.
The China Semiconductor Industry Association said the origin of chips—whether packaged or unpackaged—will be defined by the location of wafer tape-out factories.
In electronics design, tape-out is the final stage of the design process for integrated circuits before they are sent for manufacturing.
Under the rule, U.S. fabless companies, meaning those that design chips but don't have their own semiconductor plants like Nvidia, Apple, AMD, Qualcomm, Broadcom, and Marvell could not be subject to the additional tariffs China announced earlier this week, sources familiar with the matter told China Daily.
Their China-bound chips are primarily fabricated at non-U.S. foundries such as TSMC in China's Taiwan or Samsung in South Korea, with packaging or testing concentrated in Asia. Even if a fraction of their products rely on U.S.-based plants, these companies could pivot production to overseas foundries to mitigate tariff risks, added the sources who seek anonymity.
China raised additional tariffs on all goods imported from the United States to 84 percent on Thursday.
In contrast, the policy is expected to disproportionately affect U.S. chip companies with domestic wafer fabs, including Intel, Global Foundries, Texas Instruments, Micron, Analog Devices, Microchip, Skyworks and Qorvo. These firms' China-bound chips produced at U.S.-based plants will possibly face additional tariffs, added the sources.
Under the rule, for example, chips designed by U.S. companies and fabricated in U.S. plants but packaged in Malaysia will now be classified as U.S.-origin, subjecting them to the increased tariffs under ongoing U.S.-China trade measures, sources added.
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