The biggest winner in the tariff war: Domestic analog chips | Kejin·Hard Tech

Author | Song Wanxin

Editor | Zheng Huaizhou

In the past week, under the unpredictable tariff war, as the focus of the Sino-US conflict, the global supply chain of semiconductors has been impacted, and the secondary market has also experienced fluctuations.

The latest news is that US President Trump and his senior trade officials said that semiconductors and electronic products are not actually exempt from tariffs, but will be subject to additional tariffs under Section 232.

Although the tariff policy is uncertain, a consensus on "domestic substitution" has been formed in the secondary market. Whether it is reciprocal tariffs, changes in the rules of origin determination, or semiconductor industry tariffs, despite the policy changes, the logic of "benefiting domestic substitution" remains unchanged.

01 Current tariff for chip exports: 70%

The current tariff situation in the semiconductor industry can be traced back to the timeline of the tariff war that started last year.

On September 27 last year, the amendment to the US Section 301 officially came into effect, stipulating that the tax rate for Chinese semiconductor exports would be increased to 50%. Subsequently, on February 1 and March 3 this year, the US announced two fentanyl tariffs, imposing an additional 10% tariff on imported products from China each time, totaling 20% in two times.

So far, Chinese semiconductors have faced a total export tariff of 70%.

Starting from April 2, after the US announced the reciprocal tariff policy, it raised the tariff rate on China twice in a row within a week, from 34% to 84%, and then to 125%. Finally, on April 11, Trump proposed to exempt semiconductors, smartphones and other electronic products from tariffs.

That is to say, even if semiconductors are exempt from tariffs, they still face a total export tariff of 70% under Section 301 and fentanyl tariffs. The semiconductor industry tariffs that Trump has announced but not yet implemented may further increase the export tariff.

However, regardless of the changes in US policies, on April 11, China issued a countermeasure policy by modifying the rules of origin for chips, which made the path of domestic substitution clearer and also gave rise to an investment boom in domestic substitution companies in the secondary market.

The notice pointed out that according to the relevant regulations of the General Administration of Customs, the origin of "integrated circuits" is determined according to the principle of change in the four - digit tariff number, that is, the tape - out location is recognized as the origin.

In the chip field, "tape - out" refers to the process in which the designed integrated circuit design data is sent to a wafer foundry for actual manufacturing.

"The tape - out location is recognized as the origin" means that the origin of an integrated circuit will be determined by the location of the wafer manufacturing process, rather than the design location or the packaging and testing location.

For example, chips that are taped out in the US but packaged in Southeast Asia or China will have their origin recognized as the US, and thus face higher tariffs when entering China.

As a result, the price competitiveness of US - based IDM manufacturers has declined, including CPU manufacturer Intel, analog manufacturers ADI and Texas Instruments, and storage manufacturer Micron Technology.

After China announced countermeasures against semiconductor imports, the stock prices of chip manufacturers with factories in the US fell on April 11, while the stock price of Huahong Semiconductor in the A - share market soared 14% on the same day.

The expectation of domestic substitution has thus become the main investment theme in the market.

Everbright Securities pointed out that China's rules of origin certification have disrupted the US strategy of bringing back chip manufacturing, which is beneficial to Chinese wafer foundries with mature processes.

"On the one hand, the competitiveness of domestic analog, power, and RF manufacturers has increased, bringing more orders for the mature processes of wafer foundries; on the other hand, US - based IDM manufacturers are expected to shift from tape - out in the US to outsourcing to Chinese wafer foundries to avoid the impact of China's additional tariffs."

Several people in the chip industry said that currently, when preparing materials, chips such as those from Monolithic Power Systems and ADI have been held up by the customs.

It can be said that regardless of how the US changes the chip tariffs on China, as long as China's countermeasure policy on origin certification exists, the logic of domestic substitution will exist.

02 Is the bull market for domestic analog chips starting?

In the chip industry chain, the market generally believes that domestic analog chips are the most benefited area in this tariff war.

This comes from several aspects. First of all, analog chip manufacturers mainly adopt the IDM model. IDM is the integrated device manufacturing model, where IDM manufacturers handle the entire chip manufacturing process, including wafer fabs, packaging plants, and testing plants.

Texas Instruments, ADI, and Intel are all typical IDM models, which means that most of their wafer fabs are located in the US. Data shows that more than 80% of Texas Instruments' wafer fabs are in the US, and about 50% of ADI's.

Therefore, China's policy of designating the wafer tape - out location as the origin essentially sanctions several US analog chip factories, and correspondingly benefits domestic analog chip factories.

However, some industry insiders told 36Kr that although Huahong Semiconductor's revenue in the US is only 9.3% and the tariff policy has little impact on it, considering the distribution of the terminal market, 64% of Huahong's revenue comes from Chinese C - end customers such as consumer electronics, and some of their customers' products may be exported to the US market, thus affecting Huahong's revenue.

Secondly, from a historical perspective, the localization rate of the analog chip industry is relatively low. Data shows that from 2019 to 2024, it only increased from 9% to 16%.

Large US manufacturers such as Texas Instruments and ADI have been dominating the domestic analog chip market. The financial reports show that in 2024, TI's analog chip business revenue was $12.2 billion, accounting for 78% of the total revenue, and ADI's entire business is analog chips, with a revenue of nearly $9.5 billion in 2024.

The scale of their business in China determines the market space under the logic of future domestic substitution.

Some investors estimate that the total revenue of major US analog chip companies (Texas Instruments/ADI/ON Semiconductor, etc.) in the Chinese mainland in 2024 is about 57 billion. Among them, Texas Instruments' analog chip products in the Chinese market account for 80%, and 80% of its wafer fabs are in the US. Based on this calculation, the scale of each company's analog business in China is about $26 billion.

If this part of the market is subsequently taken over by Chinese manufacturers, it will bring huge business growth.

In addition, analog chips mainly rely on mature processes, and the domestic supply chain is relatively complete in this area, which is also a major reason why domestic analog chips benefit the most.

Judging from the trend of the secondary market, Chen Haijin, an analyst at Soochow Securities, pointed out that the analog chip sector has adjusted a lot since 2021. For example, the stock price of SGMICRO has fallen by 74% from its peak of 401 yuan, the stock price of Silead has fallen by 84% from its peak of 927 yuan, and the stock price of Novosense has fallen by 60% from its peak of 464 yuan.

"We believe that price is the most core factor suppressing the analog chip sector, and the core source of the price is that large US manufacturers such as Texas Instruments cut prices to grab market share."

The policy changes have begun to be transmitted to the industrial end. According to a report by Shanghai Securities News on April 17, some securities firms visited domestic analog chip companies for research, and all companies reported that the recent order intentions were booming, and downstream customers had a strong intention to replace products from overseas companies such as Texas Instruments and ADI.

Against the background of the tariff war, the analog chip sector in the A - share market has continued to rise. As of the close on April 18, in the past two weeks, the stock prices of SGMICRO and Novosense have risen by more than 30%, and the stock price of Silead has risen by more than 40%.

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