US Chipmakers Who Outsource Manufacturing To Be Exempt From China Tariffs, Says State-Backed Association: Here's Who Will Be Affected

U.S. chipmakers who outsource the manufacturing of their chips would escape China’s tariffs, according to the state-backed semiconductor alliance, China Semiconductor Industry Association (CSIA).

China has currently imposed 125% tariffs on goods imported from the U.S. This was in response to the Trump administration’s imposition of 145% tariffs on Chinese goods imported into the U.S.

While the Xi Jinping administration has underlined that it will ignore further tariff hikes from President Donald Trump, the currently announced tariffs would still be applicable.

Given the complex designing and manufacturing process of semiconductor chips, it was not clear how these products would be classified when it came to determining the country of origin.

However, in a recent notice posted by the CSIA on its WeChat account, the association noted that the country of origin for semiconductor chips would be the location of the wafer fabrication facility, according to a Reuters report.

This means companies like Nvidia Corp. (NVDA), Qualcomm Inc. (QCOM), and Advanced Micro Devices Inc. (AMD), among other fabless companies, will escape China tariffs since they outsource their manufacturing to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).

On the other hand, companies like Intel Corp. (INTC), Texas Instruments Inc. (TXN), and others who have fabrication facilities in the U.S. “may be classified as U.S. origin and be liable for tariff rates of 84% or higher,” the notice said.

Despite this, Nvidia’s stock was up 0.9% in Friday’s regular trading session, while AMD’s stock gained nearly 2%. TSMC’s stock was up nearly 3% as investors digested the latest development.

Qualcomm’s stock was down 0.6%, Intel shares fell 3.2%, and Texas Instruments’ stock declined by 8% at the time of writing.

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