As the United States and China engage in an uncompromising tariff war, the semiconductor industry is grappling with supply chain restructuring plans. When the United States stated it would impose a high tariff of up to 145% on China, China also announced it would define the origin based on the location of wafer manufacturing plants and impose tariffs on semiconductors made in the United States, intensifying the conflict. Global big technology corporations are expected to respond by strengthening their supply chains within the U.S. and expanding their shipments to the Chinese market from manufacturing facilities outside the U.S.
According to industry sources on the 15th, global semiconductor corporations such as NVIDIA, Qualcomm, and AMD are anticipated to accelerate adjustments to their production bases for products supplied to the U.S. and Chinese markets. The Biden Administration’s plan to impose tariffs on semiconductors produced outside the U.S. has prompted China to announce high tariffs on semiconductors produced in the U.S., aiming to minimize the resulting increase in manufacturing expenses.
As the United States and China unveil new tariff policies targeting each other within a day, tensions are peaking, leaving the semiconductor industry to deliberate its future supply chain strategies. Companies need to bolster their supply chains in the U.S. to ease the tariff burden while also being mindful of the Chinese government’s stance. Given that a significant portion of revenue for global big technology corporations such as NVIDIA, Qualcomm, and AMD comes from the U.S. and Chinese markets, a rapid implementation of a dual supply chain strategy is expected. The share of revenue from the Chinese market is understood to be in the mid-to-late 10% range for NVIDIA and AMD, while Qualcomm's is around 50%.
NVIDIA, Qualcomm, and AMD are currently operating advanced foundry plants in Arizona, USA, with TSMC to strengthen local production capabilities while it seems that the volumes supplied to the Chinese market will be produced in Taiwan and Japan. Jensen Huang, CEO of NVIDIA, noted on the 14th (local time), "By expanding manufacturing capacity in the U.S., we will meet the growing demand for AI chips and supercomputers and strengthen our supply chain." AMD also announced plans to produce next-generation AI accelerators through a 2 NANO process at the TSMC Arizona facility. Most of these products are expected to be supplied to data centers of big technology corporations like Meta and Google located in the U.S.
Products supplied to the Chinese market are expected to be concentrated in foundry plants located in South Korea, Taiwan, and Japan. Kim Yang-peng, a senior researcher at the Korea Institute for Industrial Economics & Trade, stated, "Amid escalating conflicts between the U.S. and China over tariffs, individual corporations have no choice but to respond through restructuring their supply chains," and added, "They will establish strategies to diversify production bases to minimize tariff impositions from the U.S., China, and others."
Foundry corporations such as Intel, Texas Instruments (TI), and GlobalFoundries, which finalize chip production in the U.S., are also set to accelerate the diversification of their supply chains. Intel supplies central processing units (CPUs) not only for AI accelerators but also for servers and PCs to Chinese corporations. TI and GlobalFoundries produce legacy semiconductors used in home appliances. Intel and TI are also noted to have a share of revenue from the Chinese market in the mid-to-late 20% range.
A representative from the semiconductor industry said, "As corporations operating fabs in the U.S. like Intel, TI, and GlobalFoundries are finding themselves in a difficult situation, they are forced to redirect delivery volumes to overseas plants; however, it will not be easy to resolve this quickly since each plant has different optimized processes and production capacities."