China on Friday said U.S. chip firms outsourcing manufacturing would be exempt from the country’s tariffs on U.S. goods, according to a notice on WeChat.
The post by the China Semiconductor Industry Association indicated that for all integrated circuits, import customs would be based on the country where they were manufactured, according to a Google translation.
That means, for example, that chips purchased by Chinese firms from American companies like Nvidia (NVDA)—which outsources manufacturing to TSMC (TSM) in Taiwan—would not be subject to China’s tariffs on U.S. goods. On Friday, China hiked its tariffs on U.S. imports to 125% after President Donald Trump elevated U.S. duties on Chinese goods to 145%.
However, American companies that manufacture domestically like Texas Instruments (TXN) and Intel (INTC) would still see China’s tariffs apply to those chips made in the U.S.
Shares of Texas Instruments plunged over 8% in recent trading following the news, making it the worst-performing stock in the S&P 500. Shares of Intel also tumbled, while Nvidia and TSMC gained. (Read Investopedia’s live coverage of today’s market action here.)
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