|
Getting your Trinity Audio player ready...
|
China’s state-backed semiconductor association said semiconductors fabricated within the country will be exempt from tariffs, in a potential boost for domestic chip manufacturers and overseas companies outsourcing production in China.
The clarification announced by the China Semiconductor Industry Association (CSIA) could also be a blow for the US’ programme to bring more manufacturing into the country, as chips fabricated at US plants could incur heavy import duties for the Chinese market, the world’s biggest semiconductor market.
CSIA said in an “urgent notice” posted on its WeChat account on Friday that the declared country of origin for all integrated circuits is the location of the fabrication plant, regardless of the location of packaging or other processes.
Chip imports
The measure could encourage chip designers to use Chinese foundries such as SMIC or Hua Hong, the largest and second-largest chip manufacturers in the country, for manufacturing amidst rising tariffs between the US and China.
Shares in both companies rose sharply in Hong Kong trading on Friday.
ICWise, a Shanghai-based consultancy, said in a research note that CSIA’s guidance could push US-based companies to move away from domestic manufacturing toward more outsourcing.
Taiwan’s TSMC and South Korea’s Samsung Electronics, two major chip manufacturers, are not affected by Chinese tariffs, meaning their impact is expected to be limited.
The companies manufacture chips for companies such as Apple, AMD, Nvidia and Qualcomm.
He Hui, semiconductor research director at Omdia, said the immediate impact of tariffs within China appeared limited, since most of the country’s imported chips are not manufactured in the US.
Manufacturing strategy
The guidance means Chinese tariffs will, however, directly affect ADI, Intel, GlobalFoundries, Microchip Technology, ON Semiconductor and Texas Instruments, which manufacture within the US, analysts said.
“It is clear that some chips made in the US will still be taxed even if they are packaged in China,” said He.
Micron Technology, which has manufacturing sites in China, Taiwan, Japan, Malaysia and Singapore, told US customers last week that it would impose surcharges on some products due to tariff-related costs, Reuters reported.
China imported $386 billion (£296bn) worth of chips last year, up 10.4 percent from the previous year, according to Chinese customs data.
