Shares of Intel Corp (NASDAQ:INTC, ETR:INL) and Texas Instruments Inc (NASDAQ:TXN) slumped on Friday after China clarified that retaliatory tariffs on US goods would not apply to semiconductors manufactured outside the US, such as those made in Taiwan.
Intel dropped 3.5% and Texas Instruments tumbled nearly 6.7%, while ON Semiconductor slid 3.6%, as investors digested guidance from China’s main chip industry group suggesting that chips produced at US-based fabs would face steep new import duties.
The China Semiconductor Industry Association (CSIA) said in a notice that chips’ country of origin would be determined by the location of wafer fabrication — a designation that leaves companies like Nvidia Corp (NASDAQ:NVDA, ETR:NVD) and Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD), which rely on Taiwan’s Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) for manufacturing, largely exempt from China’s newly announced 125% tariff on US goods.
The clarification triggered a sharp divergence in chip stocks. Nvidia rose 2.6%, and AMD gained nearly 5%, as investors bet the tariff exemption would shield them from fallout in the US-China trade war.
Chips made by Intel, Texas Instruments, ADI, and ON Semiconductor — which operate their own US-based fabs — may be liable for tariff rates of 84% or higher, according to Chinese tech forum EETop.
The tariff development follows Beijing's move to retaliate against Washington’s decision to raise duties on Chinese goods to 145%, further escalating tensions between the world’s two largest economies.