Semiconductor Wafer Fabrication as Place of Origin: Analyzing US-China Tariffs and Beneficial Areas in the Semiconductor Industry (Latest Version)

According to media reports, the China Semiconductor Industry Association issued an “Emergency Notice on the Rules for Determining the ‘Place of Origin’ of Semiconductor Products” on April 11.According to the relevant regulations of the General Administration of Customs, the place of origin for “integrated circuits” is determined based on the four-digit tariff code change principle, meaning the wafer fabrication site is recognized as the place of origin. It is recommended that the place of origin for “integrated circuits”, whether packaged or unpackaged, be declared based on the location of the “wafer fabrication factory” during import customs clearance.Once the news broke, it quickly gained traction in the semiconductor field, sparking widespread discussion in the market and industry.According to brokerage analysis, some US-led semiconductor products are expected to see price increases due to tariffs, accelerating the domestic substitution process, while also favoring the foundry segment, as tariff frictions may prompt end customers to shift to foundry capacities in mainland China.As we mentioned earlier in our analysis of tariff benefits, semiconductors, being one of the most important and urgently needed fields for domestic self-control in recent years, will undoubtedly be placed in a more prominent position under the US-China tariff frictions, warranting continuous attention from all.Semiconductor Wafer Fabrication as Place of Origin: Analyzing US-China Tariffs and Beneficial Areas in the Semiconductor Industry (Latest Version)This issue will outline the current development status of the domestic semiconductor industry chain against the backdrop of US-China tariff frictions, as well as the actively beneficial sub-sectors under tariff countermeasures for further research and reference.

1. Investment Logic Framework

In the context of US-China tariff frictions, the self-control and technological breakthroughs of the Chinese semiconductor industry chain have become core strategic directions. The adjustment of the place of origin rules will accelerate the domestic substitution process, promoting technological upgrades and capacity expansion in wafer foundry, equipment materials, automotive-grade chips, and other segments. The core logic includes:

  1. Tariff Countermeasure Effects: Price increases of US semiconductor products force domestic substitution, raising demand for local foundry capacities.
  2. Technological Breakthrough Paths: Capacity expansion in mature processes (28nm and above) and technological breakthroughs in advanced processes (7nm and below).
  3. Industry Chain Coordination: Localization of the entire chain from equipment to materials to design to manufacturing, driven by policy support and capital investment.
  4. Scenario Innovation Opportunities: Emerging demands driven by AI, new energy vehicles, and smart terminals promote technological iteration in sub-sectors.

2. Current Status and Analysis of Affected Areas and Representative Enterprises

1. Automotive Chips

  • Industry Status: The penetration rate of new energy vehicles exceeds 40%, with over 1000 chips used per vehicle, but high-end chips (such as ADAS and electronic control systems) still rely on imports, with a localization rate of less than 5%
  • Core Directions
    • Power Semiconductors: The penetration rate of silicon carbide (SiC) modules in 800V high-voltage platforms has increased to 35%, with Silead and BYD Semiconductor leading domestic substitution.
    • Automotive-grade MCUs: Zhongying Electronics and Jiefa Technology have achieved mass production of body control chips, while Zhaoyi Innovation’s automotive-grade products have passed Tesla certification.
  • Representative Enterprises
    • Silead (603290.SH): Leading domestic automotive-grade IGBT module manufacturer, SiC production line to be operational by 2025, with over 50 compatible models and a gross margin of over 40%.
    • Zhaoyi Innovation (603986.SH): First RISC-V architecture MCU launched, automotive-grade products introduced to BYD, with a DRAM localization rate of 20%.

2. Memory Chips

  • Industry Status: Breakthroughs in HBM and DDR5 technologies, but EUV photoresists still rely on imports, and 3D NAND stacking technology is catching up to international levels.
  • Core Directions
    • HBM Technology: Yangtze Memory’s 128-layer 3D NAND has entered mass production, while Changxin Memory is expanding capacity for 19nm DDR5.
    • Equipment Materials: The localization rate of Northern Huachuang’s etching machines and Anji Technology’s polishing liquids has increased to 30%.
  • Representative Enterprises
    • Yangtze Memory (not listed): The third-largest NAND manufacturer globally, with a yield rate of over 90% for 128-layer products and a domestic equipment procurement ratio of 40%.
    • Northern Huachuang (002371.SZ): Mass supply of 28nm etching machines, currently developing 5nm processes, a core target for equipment localization.

3. MCU Chips

  • Industry Status: The localization rate of mid-to-low-end consumer electronics MCUs exceeds 50%, but automotive-grade products are still monopolized by Infineon and Renesas.
  • Core Directions
    • RISC-V Architecture: Allwinner Technology and Beijing Junzheng have broken through the ARM ecosystem barrier, with main control chips supporting AI edge computing.
    • Automotive Certification: Four-dimensional Map’s MCU has entered BYD’s supply chain, and Jiefa Technology has completed ISO 26262 functional safety certification.
  • Representative Enterprises
    • Zhongying Electronics (300327.SZ): Leading market share in home appliance MCUs, automotive-grade products introduced to Hyundai/Great Wall, with a gross margin of over 35%.
    • Zhaoyi Innovation (603986.SH): The world’s first RISC-V architecture 32-bit MCU in mass production, integrated “storage-computing” solutions for industrial scenarios.

4. Lithography Machines/Photoresists

  • Industry Status: The localization rate of 28nm DUV lithography machines is less than 5%, and EUV light source technology lags behind ASML by 15 years.
  • Core Directions
    • Light Source Breakthroughs: Shanghai Microelectronics is optimizing tin target bombardment technology, while Harbin Institute of Technology is developing discharge plasma (DPP) light sources.
    • Material Substitution: Nanda Optoelectronics’ ArF photoresist has passed verification, and Huate Gas’s high-purity electronic special gases have a localization rate of 25%.
  • Representative Enterprises
    • Shanghai Microelectronics (not listed): Mass production of 90nm DUV lithography machines, with 28nm immersion lithography machines under development, and light source collection efficiency improved to 15%.
    • Nanda Optoelectronics (300346.SZ): ArF photoresist has passed verification by SMIC, with KrF photoresist in mass supply, a key target for domestic substitution.

5. Chip Foundry

  • Industry Status: SMIC has achieved mass production at 14nm, and Hua Hong Semiconductor has a yield rate of over 95% at 28nm, but EUV lithography machines still rely on imports.
  • Core Directions: Expansion of mature process capacity, with SMIC’s Beijing Phase II expanding 14nm capacity and Hua Hong focusing on automotive-grade foundry.
  • Special Process Breakthroughs: Jinghe Integrated’s CIS sensor foundry market share has increased to 10%, and Yandong Micro’s third-generation semiconductor production line has been launched.
  • Representative Enterprises
    • SMIC (688981.SH): The third-largest wafer foundry globally, with a utilization rate of over 90% for 14nm capacity, and a core supplier of Huawei’s Kirin chips.
    • Hua Hong Semiconductor (01347.HK): The world’s leading foundry for embedded memory chips, with a yield rate of over 98% for 55nm processes, and automotive-grade customers accounting for 30%.

    3. Comparison of Core Enterprise Competitiveness

    Sub-sector Representative Enterprises Technical Highlights Market Share Policy Support
    Automotive Chips Silead Second globally in automotive-grade IGBT modules, SiC production line to be operational by 2025 35% domestic Key support from the National Big Fund Phase III
    Memory Chips Yangtze Memory Mass production of 128-layer 3D NAND, with a domestic equipment procurement ratio of 40% 12% globally Ministry of Industry and Information Technology’s “Strong Storage Nation” special subsidy
    MCU Chips Zhaoyi Innovation First RISC-V architecture MCU launched, breakthrough in Tesla supply chain 5% automotive-grade Shanghai “02 Special” R&D funding support
    Lithography Machines Shanghai Microelectronics Mass production of 90nm DUV lithography machines, light source efficiency improved by 30% 90% domestic Tax reduction policies in Shanghai Free Trade Zone
    Chip Foundry SMIC 95% yield for 14nm FinFET process, core supplier for Huawei 15% globally Export control exemptions, tax rebate incentives

    4. Risks and Opportunities

    • Risk Alerts
      • Technological iteration risks: 3D packaging and Chiplet technology may weaken the effectiveness of place of origin rules..
      • Geopolitical risks: The US may escalate maintenance bans on SMIC equipment, restricting EUV technology cooperation.
    • Strategic Opportunities
      • Policy dividends: The Big Fund Phase III may lean towards equipment materials, with a focus on breakthroughs in lithography machines and EDA tools.
      • Market space: The global AI chip market is expected to exceed $150 billion by 2025, with significant domestic substitution increments.

    5. Conclusion

    The adjustment of place of origin rules is essentially an industrial chain reconstruction under the US-China technological competition, with short-term benefits for wafer foundry and equipment materials, while long-term breakthroughs are needed in critical areas such as lithography machines and EDA. It is recommended to focus on core targets such as SMIC (mature process expansion), Shanghai Microelectronics (EUV light sources), and Zhaoyi Innovation (automotive-grade MCUs), while also tracking the progress of the RISC-V ecosystem and third-generation semiconductor technologies.

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