Introduction
China’s new policy on chip origin classification is shaking up the global semiconductor landscape. This shift could significantly affect U.S.-based chipmakers like Qualcomm, AMD, Intel, and Texas Instruments (TI). Under this new rule, China now classifies chips based on where the wafer is made rather than where the chip is assembled.
As a result, companies like Qualcomm and AMD may dodge tariffs, while rivals like Intel and TI could face increased costs. Here’s what this means for the industry.
Overview: 5 Key Points
China’s new rules classify chips based on the location of wafer production, not packaging.
Qualcomm and AMD will likely avoid tariffs since they rely on TSMC’s Taiwanese fabs.
Intel and TI could face higher tariffs due to U.S.-based fabrication.
TSMC and second-tier foundries may see increased demand as companies shift production.
Smaller chipmakers may have to adjust their supply chains to avoid tariffs.
China’s Policy Shift and Its Impact
In April 2025, the China Semiconductor Industry Association announced a significant change to the way chip origin is classified.
The new policy stipulates that the origin of chips will now be determined by where the wafer is fabricated, not where the chip is packaged.
This could have major implications for companies manufacturing chips both inside and outside the U.S.
Previously, chips were classified based on the location of their final assembly or packaging. However, under the new rules, if a company’s wafer is produced in a foreign country, the chip will be classified as originating from that country.
This is particularly important for U.S.-based semiconductor companies, which rely heavily on overseas fabrication for some of their most advanced products.
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Qualcomm and AMD’s Advantage
Qualcomm and AMD are well-positioned under China’s new chip origin rules. Both companies use TSMC in Taiwan to fabricate their chips. Since the wafers are made in Taiwan, the chips are not considered U.S.-origin by Chinese customs.
This allows Qualcomm and AMD to avoid new Chinese tariffs on U.S.-made chips. It gives them a major pricing and supply advantage in the Chinese market.
Qualcomm, which sells millions of mobile chips in China, benefits the most. AMD also gains, as it can continue offering CPUs and GPUs without extra costs. This keeps both companies competitive against rivals facing higher tariffs.
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Intel and TI May Face Higher Costs
IIntel and Texas Instruments (TI) could face setbacks under China’s new chip origin rules. Both companies still make many of their chips in the U.S.
Intel produces its processors in American fabs. So, under the new rules, its chips are classified as U.S.-origin. This means they will face higher tariffs in China.
TI is in a similar position. Much of its chip production happens in the U.S., making its products subject to Chinese tariffs too.
These tariffs could raise costs for both companies. They may have to absorb the losses or raise prices for customers in China.
This would make it harder to compete with Qualcomm and AMD, who avoid tariffs. Intel and TI may need to shift production to overseas foundries to stay competitive.
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A Shift Toward TSMC and Other Foundries
One of the most significant effects of the new policy is that it could drive more orders toward TSMC and other second-tier foundries like Taiwan’s UMC (United Microelectronics Corporation) and Vanguard, a TSMC affiliate. As companies look to avoid tariffs on U.S.-made chips, they may shift their production to these foundries.
TSMC, in particular, is poised to benefit. The company has become the go-to supplier for many major tech firms, including Apple, Qualcomm, and AMD. With its state-of-the-art chip production facilities, TSMC is well-positioned to handle the increased demand. However, switching production to a new foundry is not without challenges. It often involves costly and time-consuming re-taping processes, which could delay production.
Second-tier foundries like UMC and Vanguard could also see an uptick in business as companies scramble to avoid U.S.-made chip tariffs. These foundries may not have the same advanced capabilities as TSMC, but they still offer competitive pricing and are a viable option for companies looking to pivot away from U.S. production.
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Smaller Chipmakers May Adjust Supply Chains
Smaller semiconductor companies like Analog Devices, NXP, and ON Semiconductor may also be impacted by China’s new chip origin rules. These companies rely on U.S.-based fabs for chip production, so their products could face tariffs when imported into China.
To avoid the tariffs, they may need to shift some production to overseas foundries like TSMC, UMC, or Vanguard. However, transitioning to new supply chains can be complex and costly.
IC design houses, such as Silergy, may benefit from the shift. As companies look for alternatives to U.S.-made chips, demand for these design houses’ products could increase.
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Conclusion
China’s new chip origin rules will likely affect the global semiconductor market. Qualcomm and AMD stand to benefit, while Intel and TI may face higher costs due to U.S.-based production. The shift could boost demand for TSMC and other second-tier foundries.
Smaller chipmakers may need to adjust their production strategies. As trade policies continue to evolve, the global semiconductor supply chain will face increasing complexity.
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