The China Semiconductor Industry Association (CSIA) has clarified that the place of origin of integrated circuits (ICs) is determined by the location of wafer fabrication – a key process in the chip supply chain alongside chip design, packaging and testing. Regardless of whether the chips are packaged or unpackaged, IC products should declare the wafer fabrication facility’s location as the origin when reporting imports, according to a CSIA notice. Defining the “origin” of chips based on the “last substantial transformation” could encourage chip developers to process their products at local foundries such as Semiconductor Manufacturing International Corporation (SMIC). The change has implications for the U.S. semiconductor industry. The rule from China, the world’s largest IC market, could increase the cost of chips from fabs on American soil, which could persuade fabs to set up facilities outside the U.S., according to a research note by ICWise, a Shanghai-based consultancy. The research note argued that Trump’s tariffs would fail to achieve the goal of “making America great again”, as they would instead only “make America outsource again”.
The change comes amid an escalating tariff war between the U.S. and China. However, the direct impact could be limited, as chips manufactured by foundries such as those operated by Taiwan Semiconductor Manufacturing Co (TSMC) and Samsung Electronics are exempt from the tariffs targeting the U.S. Bearing the brunt of the clarified rule are U.S.-based integrated device manufacturers and foundries such as those operated by Intel, GlobalFoundries, Microchip Technology and Texas Instruments.
He Hui, Semiconductor Research Director at Omdia, said that the immediate tariff impact appears limited, as most of China’s imported chips are not directly manufactured and shipped from the U.S. China will continue to strongly support the local semiconductor industry, not only in chip manufacturing but also in upstream sectors such as materials and equipment, which are core technologies that currently still rely significantly on imports, He said. The tariffs have been disrupting the global semiconductor supply chains. U.S. memory chipmaker Micron Technology – which has manufacturing sites in China, Taiwan, Japan, Malaysia and Singapore – informed U.S. customers that it would impose surcharges on some products to offset tariff-related costs. According to China Customs, the country imported USD386 billion worth of ICs in 2024, an increase of 10.4% from 2023, the China Daily reports.
