Tariff Policies Reshape the Landscape of the Global Chip Industry

On April 12, 2025, a pivotal moment arrived as China, after approval from the State Council, adjusted the tariff rate on imports from the United States. The rate soared from 84% to a staggering 125%, creating a new reality for the import of American - made chips. In response to this, the China Semiconductor Industry Association promptly issued an urgent notice regarding the "origin" determination rule for semiconductor products. According to this notice, the origin of "integrated circuits" will be determined based on the four - digit tariff code change principle, with the wafer - fab location being recognized as the origin.

This series of events has had an immediate and profound impact on the industry. Many American chip companies have reacted by pausing price quotations for new orders. The cost burden has become insurmountable for some, leading to speculations that American chips may accelerate their withdrawal from the Chinese market. American - based wafer - manufacturing giants such as GlobalFoundries, Intel, Micron, and Texas Instruments are all in the spotlight. Intel's production capacity is mainly concentrated in the United States, while Texas Instruments has most of its wafer - fabs in Texas, Maine, and Utah, with only a few overseas. Additionally, certain products from companies like Intel's CPU and GPU, ADI's analog chips, Broadcom's radio - frequency and automotive chips, Micron's DRAM and NAND chips, ON Semiconductor's power products, and Qorvo's radio - frequency front - end products are likely to be affected by the new origin - determination rules.

The tariff - induced disruption, however, is not all doom and gloom. It has, in fact, spurred a new wave of domestic innovation and self - reliance in the semiconductor industry. In the face of potential market voids left by American chips, Chinese domestic chip manufacturers are stepping up to the plate. The past few years since the start of the trade disputes in 2018 have witnessed remarkable growth in China's semiconductor sector. Now, the latest tariff policies are expected to further expedite the process of domestic substitution.

In the domestic chip market, companies like Loongson, Huawei, Phytium, Hygon, Zhaoxin, and Shenwei are emerging as key players. Hygon and Zhaoxin, which adopt the x86 technology architecture, have obtained complete cross - patent authorization and instruction - set term authorization respectively. Hygon, in particular, has established its own domestic C86 instruction system by expanding the core instruction set, boasting strong security, performance, and independent iteration capabilities, and is regarded as part of the first - tier in the domestic CPU market.

In the domestic ARM - based technology route, Kunpeng and Phytium, both based on the ARM V8 architecture, have made significant progress through domestic independent research and development. Kunpeng is well - received in the domestic substitution user market for its highly integrated design and rich software product ecosystem. Phytium, on the other hand, is highly regarded in the trusted - computing market due to its innovative security architecture.

Loongson and Shenwei, with their deep - rooted independent R & D, have won the trust of the government and military - related sectors. Loongson has achieved performance upgrades in multiple generations of processor products based on its completely independent LoongArch instruction system. Shenwei, having shed external technology dependencies, has been successfully applied in crucial fields such as government and military. These two companies are now focusing on further developing their ecosystems to enter the broader commercial market.

In the international arena, the impact of tariff policies also extends to government - led initiatives. The U.S. Chips and Science Act, signed into law in 2022, authorized approximately $280 billion in new funding to promote domestic semiconductor research and manufacturing. Although by March 2024, the act had incentivized numerous potential projects, it faced challenges such as bureaucratic delays in grant disbursement and shortages of skilled labor. The act was seen as a strategic move to enhance the resilience of the American supply chain and counter China in the semiconductor field.

Amidst these challenges, there are also signs of technological breakthroughs. For example, Chinese start - up Lightelligence's photonic - arithmetic computing engine (PACE), a hybrid optical - electronic architecture, recently made headlines by being published in the top journal Nature. PACE demonstrated ultra - low - latency and high - energy - efficiency computing, with a 64×64 matrix operation latency as low as 3 nanoseconds, 500 times faster than traditional GPUs. This technological leap showcases the potential for the industry to overcome challenges through innovation.

As the global chip industry grapples with the far - reaching consequences of tariff policies, the road ahead is filled with both challenges and opportunities. The push for domestic substitution and technological innovation may reshape the industry's global landscape, leading to a more diversified and resilient semiconductor ecosystem.