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“One minute they ask, the next minute they raise the price.” In the view of a domestic chip buyer, after the introduction of the US tariff policy, the market has gone “crazy” in its rush to buy and stock up.
Although the domestic semiconductor industry had long anticipated the tariff policy after Trump took office, the so-called “reciprocal tariffs” launched by the United States in April have caused multiple rounds of shocks to escalate. In response, China has also taken resolute countermeasures.
The impact of tariffs soon triggered a chain reaction in various product markets. In the semiconductor market, memory chips, which have a huge annual import and export trade volume and are known as “commodities”, were the first to hear rumors of price increases.
According to Reuters, US memory chip giant Micron has notified that some storage products (DRAM memory and SSSD solid-state drives, etc.) will be subject to tariff-related surcharges. The global production bases of memory chips are concentrated in Asia. South Korea, Japan, China, Vietnam, and Singapore and Malaysia in Southeast Asia are currently on the latest US reciprocal tariff list and have been hit by varying degrees of tax increases.
The imposition of tariffs will directly lead to an increase in chip costs. In order to maintain profit margins, chip manufacturers often increase chip prices. Customers are worried about avoiding future supply shortages and price increases, and have begun to rush to buy spot goods on the market to control costs.
Three semiconductor industry insiders from different cities told reporters that not only memory chips, but also mainstream chip spot markets such as analog chips and automotive power semiconductors are extremely hot. Because customers rush to buy spot goods, prices have risen, “one price a day”, and domestic agents of Micron, Texas Instruments, and ADI have stopped quoting to customers.
Due to the unclear future of tariff policies, most spot traders in the market are currently taking a wait-and-see attitude, and some people hope to reproduce the “overnight wealth” under the shortage and price increase in 2021.
But the industry feels more about the helplessness of normal business after being disrupted by the US tariff policy. A chip manufacturer believes that “there is no use in raising prices without demand.” Unlike the background of chip supply and demand in 2021, customers are now stockpiling goods because of panic tariff policies, but the market demand for products such as memory chips and analog chips has been hovering at a low point in the past three years. Without real demand, this wave of increases cannot continue.
As for how to continue business in the future, the industry has not yet had a definite answer.
According to many industry insiders, currently imported chip products from overseas have to undergo origin review, and products originating from the United States will be subject to tariffs according to the new regulations. The manufacturing of chip products is mainly divided into three major processes: chip design, wafer manufacturing, and packaging and testing. According to the latest version of the “Regulations on Substantial Changes in Non-Preferential Rules of Origin” issued by the General Administration of Customs of China on April 9, the production sites of wafers and packaging and testing will be included in the origin recognition standards. According to manufacturers who have been audited by the customs, the first-line customs will be different in actual judgments.
At present, the Chinese Ministry of Foreign Affairs has publicly responded to the multiple rounds of reciprocal tariff policies launched by the United States and stated its position. Foreign Ministry spokesman Lin Jian believes that the United States, out of selfishness, uses tariffs as a weapon to impose extreme pressure and seek personal gain, which seriously infringes on the legitimate rights and interests of various countries and seriously violates the rules of the World Trade Organization. As for the United States’ repeated escalation of tariff pressure, China firmly opposes it and will never accept it. He also said that if the United States really wants to solve the problem through dialogue and negotiation, it should adopt an attitude of equality, respect and reciprocity. If it insists on fighting a tariff war and a trade war, China will definitely accompany it to the end.