- Intel’s (INTC) shares fell 6% on Friday, reaching an intraday low of $18.18, following China’s new policy linking chip import origins to manufacturing location. The regulation imposes tariffs of 84% or higher on U.S.-made chips, including those from Intel.
- U.S. chip designers like AMD (up 5%), Nvidia (up 2.6%), and Qualcomm (up 3.3%) avoided tariffs as their TSMC-made chips are classified as Taiwanese, per the China Semiconductor Industry Association.
- The policy disadvantages U.S.-based manufacturers like Intel, a major PC chip producer and the only American firm preparing advanced U.S. processors, amid complex global supply chain dynamics.
Intel’s (INTC) stock experienced a dip of 3.52% to $19.18 on Friday, with shares dipping as low as $18.18, as China’s new trade policy clarified that chip import origins are determined by manufacturing location, directly affecting U.S.-based producers like Intel. The China Semiconductor Industry Association announced that the country of origin for chips, whether packaged or unpackaged, is tied to the location of the wafer fabrication plant, imposing tariffs of 84% or higher on chips made in U.S. facilities. This policy, detailed in an urgent notice on the association’s WeChat account, contrasts with exemptions for U.S. chip designers like Qualcomm (QCOM) and Advanced Micro Devices (AMD), whose chips manufactured by Taiwan’s TSMC are classified as Taiwanese, sparing them China’s retaliatory tariffs.
The broader semiconductor market reacted unevenly to the news. Shares of AMD surged 5%, Nvidia gained 2.6%, and Qualcomm rose 3.3%, reflecting their reliance on non-U.S. fabrication plants, primarily TSMC. Intel, alongside other U.S. manufacturers like Texas Instruments (TXN), Analog Devices Inc. (ADI), and ON Semiconductor (ON), faces heightened exposure due to its domestic production focus, particularly as one of the largest producers of personal computer chips and the only American firm preparing to manufacture cutting-edge processors stateside. The policy underscores the complexities of global chip supply chains, where manufacturing locations span multiple countries, creating uncertainty until China’s clarification.
Intel’s challenges are compounded by its strategic push to bolster U.S.-based advanced manufacturing, a move that aligns with national efforts to secure domestic semiconductor production but now carries immediate financial repercussions in key markets like China. The tariff disparity highlights a competitive disadvantage for U.S.-based chipmakers, as firms outsourcing to foreign foundries benefit from lower import costs in China, a critical market for global semiconductor demand. The market’s response, with Intel lagging far behind its peers, signals investor concerns about the company’s near-term profitability amid escalating trade tensions and the high costs of maintaining U.S. fabrication plants.
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