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China: Urgent notice regarding semiconductor tariffs!

Daniel Nenni

Admin
Staff member
Our reporter Jia Li

On April 11, the China Semiconductor Industry Association issued an "Emergency Notice on the Rules for Determining the "Origin" of Semiconductor Products". Notice reminder: According to the relevant regulations of the General Administration of Customs, the origin of "integrated circuits" is determined according to the principle of changing the four-digit tariff number, that is, the wafer production site is determined as the origin. Please prepare PO certification materials when declaring for customs verification. For specific regulations, please pay attention to the content of "General Administration of Customs Order No. 122 on the Standards for Substantial Changes in Non-Preferential Rules of Origin".

The China Semiconductor Industry Association recommends that the origin of "integrated circuits", whether packaged or unpackaged, should be declared based on the location of the "wafer fabrication factory" when declaring import customs.

Han Juke, vice president of the China Communications Industry Association, said in an interview with Securities Daily that wafer manufacturing (tapeout) is the most core and technically demanding link in the semiconductor industry chain, which directly determines the chip manufacturing process. Using the tapeout location as the origin can more accurately identify the true technical source of the chip and avoid blurring the ownership of key technologies through the packaging location (usually a labor-intensive area). At the same time, this move is also a key step in China's independent and controllable strategy for the semiconductor industry chain, which is in line with international trade rules and provides institutional guarantees for domestic industrial upgrading. In the future, with the accumulation of origin data, China's policy formulation and market regulation in the semiconductor field will be more targeteed.

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(Edited by Zhang Mingfu and Shangguan Monroe)
 

US chipmakers outsourcing manufacturing will escape China's tariffs​


Illustration picture of semiconductor chips on a circuit board

Item 1 of 3 Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo

BEIJING, April 11 (Reuters) - U.S. chipmakers which outsource manufacturing will be exempt from China's retaliatory tariffs on U.S. imports, according to a notice by the main Chinese semiconductor association on Friday.

Given the highly specialized and multi-country nature of chip supply chains, there was uncertainty within the industry about how tariffs would be applied to chip imports.

"For all integrated circuits, whether packaged or unpackaged, the declared country of origin for import customs purchases is the location of the wafer fabrication plant," the state-backed China Semiconductor Industry Association (CSIA), which represents the country's largest chip companies, said in an "urgent notice" on its WeChat account.

For U.S. chip designers such as Qualcomm and AMD that outsource manufacturing to Taiwanese chipmaking giant TSMC, Chinese customs authorities will classify these chips' place of origin as Taiwan, according to EETop, an information platform and forum for Chinese chipmakers.
This means China-based companies importing their chips will not be forced to pay China's retaliatory tariffs on U.S. imports, EETop said on its WeChat account.

"In contrast, chips made by...Intel, Texas Instruments, ADI, and ON Semiconductor - which operate their own U.S.-based fabs - may be classified as U.S. origin and be liable for tariff rates of 84% or higher," it added.

Beijing on Friday increased its tariffs on U.S. imports to 125%, hitting back against U.S. President Donald Trump's decision to hike duties on Chinese goods to 145%. EETop's analysis was published on Friday before Beijing's latest tariff hike.

After CSIA's clarification, the prospect of high tariffs on U.S.-origin chips led to a surge in Chinese chipmakers' shares on Friday.

"The notice from CSIA helps distinguish which U.S. chips will be hit with tariffs," said He Hui, semiconductor research director at tech research company Omdia, "It is clear that some chips made in the U.S. will still be taxed even if they are packaged in China."

He added that this could benefit China's domestic chipmaking and its supply chains as foreign semiconductor firms pursue a "China for China" strategy - manufacturing for the Chinese market in China.

 
I still think this tariff nonsense is a quick and easy political ploy to get people to the table to have real discussions about keeping the world safe. It is a high stakes poker game. The US administration is doing some serious muscle flexing which will hopefully be controlled as all of the legal stuff starts to get in the way.

Semiconductors are an easy target since you have to have them for modern life and security. While it is nice to get the attention, being a political football is getting tiresome.
 
What’s the implication of this ?

Intel is screwed (It packages a huge volume of it's chips in Chengtu to make them "Made in China")

On the other hand it's a boon for AMD while Intel will be thinking where to built it's next node fab.

If Apple is actually comitted to order chips from TSMC US, then they will also be under pressure to fulfill their binding commitments.

Next on the table will likely be revocation of duty exemption for US components in exported goods.
 
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I still think this tariff nonsense is a quick and easy political ploy to get people to the table to have real discussions about keeping the world safe. It is a high stakes poker game. The US administration is doing some serious muscle flexing which will hopefully be controlled as all of the legal stuff starts to get in the way.

Semiconductors are an easy target since you have to have them for modern life and security. While it is nice to get the attention, being a political football is getting tiresome.

I see a sort of "reverse" congress of the cow coming into focus 😱, whereby Trump will be the person making the phone call to Xi.
 
Intel is screwed (It packages a huge volume of it's chips in Chendu to make them "Made in China")

On the other hand it's a boon for AMD while Intel will be thinking where to built it's next node fab.

If Apple is actually comitted to order chips from TSMC US, then they will also be under pressure to fulfill their binding commitments.

Next on the table will likely be revocation of duty exemption for US components in exported goods.
Not really Meteor Lake is made in Ireland and Taiwan Intel has 10nm fabs in Israel Lunar Lake Arrow Lake are using TSMC Wafer Granite Rapids is made in Ireland as well. The only issues will be upcoming 18A Panther Lake but than again it has 3 chips from US/Ireland/TSMC Fabs
 
I see a sort of "reverse" congress of the cow coming into focus 😱, whereby Trump will be the person making the phone call to Xi.
Unfortunately I see neither leader picking up the phone. The Trump team's strategy seems to have made the assumption that Xi cannot make a real deal and even if Xi deals given that Xi did not perform on the first deal 4 years ago any deal achieved will have harsh enforcement mechanisms that will be unpalatable to the Chinese. A fair deal, which I assume would include allowing US tech companies like Google and Facebook unrestricted access to China, would be an existential threat to the communist party. So the real objective seems to be boxing other trading partners (e.g. Vietnam, Japan, South Korea and Taiwan) into choosing between trading with the Chinese or the US. The old national strategy of legs straddling two boats (to invoke a Chinese idiom) is no longer stable and countries have to make a choice. Making money trading with China while enjoying the American security umbrella is no longer kosher. Hence, if you view the whole stunt as a loyalty test, in my reading, if even Vietnam a fellow authoritarian communist country that fought a nasty war with the US 60 years ago chooses the US, the Trump team may actually have the upper hand.

The EU doesn't worry about any potential hegemonic hot wars with China since they're far away, so the EU will be far harder to convince. However, if the east Asian countries that quickly kissed the ring start walking away with good trade deal, the EU will be forced to deal. We'll see in the next 90 days.
 
Trump blinked biggly when big bondholders started dumping. Some say it was China and Japan. Even if it wasn't them now they know they have significant leverage. I expect a tariff deal will be announced in the next week or so.

As a result all this chip tariff talk will disappear.
 
Intel is screwed (It packages a huge volume of it's chips in Chengtu to make them "Made in China")

On the other hand it's a boon for AMD while Intel will be thinking where to built it's next node fab.

If Apple is actually comitted to order chips from TSMC US, then they will also be under pressure to fulfill their binding commitments.

Next on the table will likely be revocation of duty exemption for US components in exported goods.

Intel has fabs in Ireland and Israel,Micron has fabs in Taiwan,there will be no tariff impact on them
 
Trump blinked biggly when big bondholders started dumping. Some say it was China and Japan. Even if it wasn't them now they know they have significant leverage. I expect a tariff deal will be announced in the next week or so.

As a result all this chip tariff talk will disappear.
As Tony reported in a new thread. Gee that didn't take long. Expect Asia and EU to match soon.
 
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