China Hits US-Made Chips With Tariffs, But Those Outsourcing To Taiwan Semiconductor Exempt

China’s retaliatory tariffs on U.S. imports seek to relieve U.S. chipmakers that outsource manufacturing, Reuters reported Friday, citing the China Semiconductor Industry Association (CSIA).

For U.S. chip designers such as Qualcomm Inc QCOM and Advanced Micro Devices, Inc AMD that outsource manufacturing to Taiwanese contract chipmaker Taiwan Semiconductor Manufacturing Co TSM, Chinese customs authorities will classify these chips’ place of origin as Taiwan, exempting them of China’s retaliatory tariffs on U.S. imports, Reuters cited EETop.

AMD and Taiwan Semiconductor stocks gained on Friday after the update.

Also Read: Amazon Cancels Some China Orders After Tariffs, Vendors To Hike US Prices

Meanwhile, Intel Corp INTC, Texas Instruments Inc TXN, Analog Devices, Inc ADI, and ON Semiconductor Corp ON, which operate their U.S.-based fabs could be liable for tariff rates of 84% or higher as per CSIA. The update sent the stock prices sliding on Friday.

Beijing on Friday retaliated against the 145% U.S. tariff duties by increasing its tariffs on U.S. imports to 125%.

Also, this week, Trump announced that he would pause tariffs on countries that have not retaliated against U.S. trade measures for 90 days.

Wedbush’s Dan Ives expected “massive negotiations” and highlighted China as the “biggest wild card” for markets.

Taiwan Semiconductor launched an additional $100 billion investment in U.S. chipmaking (on top of $65 billion in April 2024) to escape Trump’s wrath for allegedly “stealing” the U.S. semiconductor business, leading to massive trade deficits for Washington.

Trump also criticized Taiwan for its lack of a defense treaty, as the U.S. is a key military backer of Taiwan. The President suggested scrapping U.S. subsidies to chipmakers like Taiwan Semiconductor to build fabs in the country to boost its semiconductor position.

Price Action: INTC is down 3.24% to $19.24 and TSM is up 3.96% to $156.95 at the last check on Friday.

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