US chipmakers outsourcing to Asia escape China’s tariff hike: Report

US semiconductor firms that outsource manufacturing to Asian foundries will be exempt from China’s retaliatory tariffs on American imports, according to a notice released Friday by the China Semiconductor Industry Association (CSIA). The clarification eases industry concerns over how tariffs would apply to the highly fragmented and globally interconnected chip supply chain.

In an “urgent notice” posted on its WeChat account, the CSIA stated that for all integrated circuits — whether packaged or unpackaged — the declared country of origin for import purposes would be the location of the wafer fabrication plant, not where the chip is designed or assembled.

This means that chips designed by U.S. companies like Qualcomm and AMD but manufactured in Taiwan by TSMC will be classified as Taiwanese imports, thus exempt from China’s new 125% tariffs on U.S. goods, according to Chinese semiconductor platform EETop.

However, U.S. firms such as Intel, Texas Instruments, Analog Devices (ADI), and ON Semiconductor, which operate fabrication facilities on American soil, will not be spared. Their chips will be classified as U.S.-origin and subject to tariffs of 84% or higher, EETop reported.

The clarification comes after Beijing’s announcement of a major tariff escalation to 125% on U.S. imports, in response to President Donald Trump’s hike to 145% on Chinese goods. The CSIA's guidance helped boost Chinese chipmakers' shares on Friday, as the market reacted to clearer distinctions between taxable and non-taxable chip imports.

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

The move reflects Beijing’s effort to protect its domestic chip consumers while still retaliating strategically against U.S. trade policy — and adds a new layer of complexity for American chipmakers navigating geopolitical tensions.