American chipmakers that contract manufacturers in countries outside the United States will be exempt from China’s retaliatory tariffs on U.S. imports, Reuters reported, citing a statement from China’s regulator.
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Given the nature of the supply chain for chips, which can come from multiple countries, there was uncertainty in the industry about how duties on chip imports would be applied, the news agency noted.
«”For all chips, whether packaged or unpackaged, the declared country of origin for import customs purchases is the location of the manufacturing plant,” the China Semiconductor Industry Association (CSIA), which represents the country’s major chip companies, said in an “urgent notice” on its WeChat account.
When chips from American companies like Nvidia, Qualcomm and AMD, which outsource production to Taiwanese contract manufacturer TSMC, enter China, Chinese customs authorities will list Taiwan as the country of origin on the documents, according to EETop, an information platform for Chinese chip makers. This means that Chinese companies will not have to pay China’s retaliatory tariffs on imports from the US, EETop explained on its WeChat account. “In contrast, chips made by Intel, Texas Instruments, ADI and ON Semiconductor, which operate their own factories in the US, may be classified as US-made and therefore subject to tariffs of 84% or higher,” the information resource reported.
Shares of Chinese manufacturers soared on Friday after the CSIA clarification. Beijing on Friday increased tariffs on US imports to 125% in response to US President Donald Trump’s decision to raise tariffs on Chinese goods to 145%.
«The notice from the CSIA helps determine which chips from the U.S. will be subject to the tariffs, said He Hui, director of semiconductor research at research firm Omdia. “It is clear that some chips made in the U.S. will still be subject to the tax even if they were packaged in China.”