US-China Trade War Escalates: Trump Set to Announce New Tariff Policy on Semiconductors, Taiwanese Contract Manufacturers Could Benefit

Former President of the United States, Donald Trump, will announce a new semiconductor tariff policy on April 14, with tariff rates expected to exceed 20%, and may involve a national security investigation under Section 232 of the Trade Expansion Act. In response, China is adjusting its semiconductor origin rules, imposing a 125% tariff on U.S.-made chips. This move could potentially benefit Taiwanese foundries like UMC and Vanguard International Semiconductor due to the shift in orders.

Trump to Announce New Semiconductor Tariff Policy, Tariff Rates Expected to Exceed 20%

According to reports from Reuters and The Wall Street Journal, Trump announced on April 12 that he will officially unveil a new tariff policy for the semiconductor industry on April 14. White House officials revealed that Trump might invoke Section 232 of the Trade Expansion Act to initiate a national security investigation and impose a new round of tariffs on imported semiconductor products. This clause was previously used to impose a 25% tariff on steel and automobiles, indicating that the semiconductor tariffs may also have high rates and broad applicability.

Analyst Ong Wei-jie noted, "The rate should start at least above 20%." This policy is expected to have a significant impact on the global semiconductor supply chain, especially for chip products manufactured in the United States.

Exemptions and Tariffs Coexist, Dual-Track Operation in U.S. Policy

Although Trump is about to impose new tariffs on semiconductor products, the U.S. Customs and Border Protection (CBP) recently announced that products such as smartphones, laptops, hard drives, memory chips, and semiconductor manufacturing equipment will be temporarily excluded from reciprocal tariffs. These exemptions apply globally, including to China, and took effect on the morning of April 5.

This exemption measure is seen as a short-term benefit for tech giants like Apple, TSMC, and NVIDIA, avoiding significant price fluctuations in consumer electronics due to rising tariffs. However, the Trump administration is simultaneously promoting a national security investigation and new tariff policy for semiconductors, indicating a strategy of "selective relaxation and precise targeting" to protect U.S. domestic manufacturing and reshape the supply chain structure.

China's Countermeasures: New Rules for Origin Determination and 125% Heavy Tariff

Meanwhile, the China Semiconductor Industry Association issued an emergency notice on April 11, adjusting the rules for determining the origin of semiconductor products. The new regulations state that the origin of integrated circuit products should be based on the "tape-out" location rather than the final packaging or design location. This means that if a chip's tape-out is completed in the U.S., even if it is finally packaged elsewhere, it will still be considered of U.S. origin.

According to FTNN News Network, the Chinese government has imposed tariffs as high as 125% on chips produced in the United States. This policy will directly impact semiconductor companies like Intel and GlobalFoundries that have factories in the U.S.

Taiwanese Foundries as Focus of Order Transfers

Amid the tariff policies imposed by both the U.S. and China, Taiwanese foundries are seen as potential beneficiaries of order transfers. Liu Pei-jen, director of the Taiwan Institute of Economic Research's Industry Database, noted, "If Chinese domestic companies cannot take on related orders, it is expected that Taiwanese companies will benefit." She further stated that wafer foundries like UMC and VIS, with their mature processes and stable production capacity, will become the first choice for U.S. IC design companies seeking alternatives.

Additionally, companies like NVIDIA and AMD, which already primarily partner with Taiwan for manufacturing, will be relatively less affected. However, for companies like Texas Instruments and Analog Devices, which still manufacture some chips in the U.S., the incentive to shift to Taiwanese foundries will significantly increase.

South Korea May Also Benefit, but Taiwan Still Holds an Advantage

Besides Taiwan, South Korea is also seen as a potential beneficiary of order transfers. Liu Pei-jen noted that South Korea has an advantage in the memory sector, but Taiwan remains dominant in IC design and wafer foundry. Therefore, although South Korea may capture some orders, Taiwan's advantage in advanced processes and customer relationships remains crucial.

Tariff Buffer Period and Industry Response

According to FTNN News Network, the Trump administration may provide a 90-day tariff buffer period to allow companies time to adjust their supply chains. However, industry insiders point out that changing foundries would inevitably involve re-tape-out and verification processes, with significant time and cost pressures. Some IC design companies are already considering activating a second supply chain to ensure stable shipments.

References

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