The China Semiconductor Industry Association has issued an “Urgent Notice on the Recognition Rules for the ‘Origin’ of Semiconductor Products,” sparking widespread discussion.
The notice states that according to the relevant regulations of the General Administration of Customs, the origin of “integrated circuits” is determined based on the four-digit tariff code change principle, meaning the wafer production location is recognized as the origin.Please take note!
Additionally, the China Semiconductor Industry Association recommends that regardless of whether the “integrated circuits” are packaged or unpackaged, the origin declared during import customs clearance should be based on the location of the “wafer production factory.”
The core content of this notice can be summarized in one sentence: “the wafer production location is recognized as the origin.” What does this actually mean?
The semiconductor industry chain can be simply divided into four stages: design, manufacturing, packaging/testing, and end application, with wafer production belonging to the manufacturing stage.
Wafer manufacturing (wafer production) is the most critical and technically demanding stage, directly determining the chip’s process technology.
Han Juke, Vice President of the China Communications Industry Association, stated that using the wafer production location as the origin can more accurately identify the true technological source of the chip, avoiding the blurring of key technology attribution through the packaging location (usually labor-intensive regions).
At the same time, this move is also a key step in China’s strategy for a self-controllable semiconductor industry chain, aligning with international trade rules while providing institutional support for domestic industry upgrades. In the future, as origin data accumulates, China’s policy formulation and market regulation in the semiconductor field will become more targeted.
According to previous customs policies, the origin of semiconductors was determined based on the location of the packaging/testing factory, but now it has changed to the wafer production location (the location of the wafer fab), which has several implications.
First, this new regulation can be seen as a countermeasure against U.S. tariffs. Chips produced by U.S. wafer fabs (such as TI, Intel) that are sold in the Chinese market may be recognized as “U.S. origin” and subject to higher tariffs.
For example, if TI’s analog chips are produced in the U.S., their price competitiveness in the Chinese market will decline, benefiting domestic replacement enterprises.
Under the “wafer production location recognized as origin” rule, market participants indicate that chips from companies like Apple, AMD, and Qualcomm, which are manufactured by TSMC, will have their origin recognized as Taiwan (not affected by high tariffs).
In contrast, chips from IDM manufacturers like Intel, Texas Instruments, ADI, and ON Semiconductor, which have their own factories in the U.S., will be recognized as U.S. origin and may face tariffs exceeding 125%.
Secondly, this will somewhat strengthen the trend of semiconductor localization, as companies may shift the wafer production stage to within China. Local wafer fabs like SMIC and Hua Hong Semiconductor may take on more international orders.
Thirdly, as companies gradually transfer core manufacturing stages domestically, the expansion of wafer fab capacity will drive demand for semiconductor equipment. The rising costs of importing U.S. equipment (due to increased tariffs) will further promote domestic alternatives.
Overall, this adjustment of origin rules is an important step for China to promote a self-controllable semiconductor industry, with the core goal of using policy levers to shift global semiconductor manufacturing stages to China while avoiding external technology blockades.
In the short term, this policy will benefit domestic wafer fabs and equipment/material companies, accelerating the process of domestic substitution; in the long term, if it can synergize with technological breakthroughs and industry chain integration, China is expected to establish a global competitive advantage in mature process fields.
Of course, the realization of the policy’s effects also depends on the speed of domestic technological breakthroughs, the stability of the international supply chain, and the trajectory of U.S.-China relations.
Source: Kuai Technology
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