How can semiconductor bear the brunt of the Sino - US trade war?
Promoting free, fair and mutually beneficial trade " is Slogan on the official website of the U.S. Trade Representative Agency ( USTR ), but this does not prevent the U.S. from" irrational " behavior of continuously imposing tariffs on Chinese imports. After several successive tax increases, the US government announced on September 18 the imposition of a tariff increase on imports of about US $ 200 billion worth of goods from China, with the tariff rate increasing to 10 % from September 24, 2018 and 25 % from January 1, 2019. In contrast to this, our country issued a public announcement deciding to impose additional tariffs on about 60 billion US dollars of imported goods originating in the United States. After taking turns to tax, what kind of haze does the domestic IC industry face? How to win again?
Behind the US Tax List Adjustment
In this round of U.S. tax increase list for China, 297 tariffs on the original proposed list were completely or partially cancelled, according to USTR's website. Products removed from the proposed list include certain consumer electronics products, such as smart watches and Bluetooth products; Chemicals needed for industrial manufactured goods, textiles and agriculture; Some health and safety products, such as bicycle helmets, children's safety furniture, such as car seats and toy pens.
On June 15, the United States issued a statement announcing a 25 % tariff on Chinese goods worth 50 billion US dollars. The semiconductor-related products listed in this list mainly involve silicon chips, mask, flat panel display and integrated circuit manufacturing equipment and their accessories, as well as IC devices such as diodes ( except LED ), processors, controllers, memories, amplifiers, etc. However, 279 products such as semiconductors, electronic parts and plastic products were added to the tariff list in the sanctions tariff launched on August 23.
On this list, computer servers and network equipment components that power data centers and Internet - based services face taxes, which will hinder applications based on cloud computing and infrastructure.
At the same time, some parts used to manufacture semiconductor equipment also face new taxes, and the chip industry has also been hit by the new taxes. It is reported that Lam Research, who manufactures chip manufacturing equipment, said in a letter to trade regulators on September 6 that tariffs on silicon, ceramic mechanical parts and other products " increase the cost of our U.S. manufacturing business and reduce our competitiveness in the global semiconductor manufacturing market". However, all the items in Lam Research's letter are on the final new tax list.
American companies are obviously worried about this list. " Our concern about these tariffs is that the United States will be hit hardest, which will lead to a slowdown in U.S. economic growth, a decline in competitiveness and an increase in the price of U.S. consumer products. " Apple said earlier in a letter commenting on the proposal.
And China's experience in the U.S. trade war has also continued to be strong: the announcement from the Customs Tariff Commission Office of the State Council said that the U.S. is determined to go its own way, leading to an escalation of Sino - U.S. trade friction. In order to safeguard free trade and the multilateral system and safeguard its legitimate rights and interests, China has had to impose additional tariffs on about 60 billion U.S. dollars of listed commodities that have been published.
According to the Foreign Trade Law of the People's Republic of China, the Import and Export Tariff Regulations of the People's Republic of China and other laws and regulations and the basic principles of international law, with the approval of the State Council, the Customs Tariff Commission of the State Council has decided to impose a 10 % or 5 % tariff on 5207 taxable items originating in the United States and about 60 billion US dollars of goods, which will be implemented from 12: 01 on September 24, 2018. If the US side insists on further raising the tariff rate, China will respond accordingly and relevant matters will be announced separately.
Of the $ 60bn 5207 items for tax purposes, the list of items that have an impact on the electronic components industry is very clear. Specifically, 10 % tariff will be formally imposed on such items as chip tantalum capacitors, chip aluminum electrolytic capacitors, other aluminum electrolytic capacitors, and switching elements such as chip fixed resistors, LED's, relays, semiconductors and silicon controlled silicon with rated power < 20W. In addition, a 10 % tariff is imposed on tantalum capacitors, other multilayer ceramic capacitors, fixed resistors with rated power > 20w, etc. And memory, other capacitors, nickel-cadmium battery and so on are charged a 5 % tariff. In addition, silica gel, monocrystalline silicon, polycrystalline silicon, silicon wafers and a large number of base polymers are included.
This also means that related imports originating in the United States will be subject to a tariff of up to 25 %, meaning that the price of the products has increased by a quarter. Prior to this, the import tax rate of connectors in electronic components has increased by 25 %.
It is understood that the U.S. brands related to resistance and capacitance involve AVX, Vishay, Kemet, Sky Well, AEM, Coil Craft, Pulse and so on. In addition, many Japanese and Korean brands also have corresponding production lines in the United States, covering a wide range of areas.
With the tariff increase, the price increase of products originating in the United States has become inevitable, which may drive the price increase of the entire resistance market. The resistance market that was originally out of stock due to the price increase has been crying all over the place. Today's trade war may cause a new round of price increase of international brands, but from another perspective, it may push forward the development of domestic resistance containers. At the same time, if the silicon chip on the top of the chip is subject to higher taxes, will it in turn promote the rise of domestic silicon chip manufacturers, but it may affect the price of the chip on the bottom.
Follow - up response
The U.S. continued to launch a " trade war" hard and repeatedly, confirming its deep " panic": to curb the development of China's strategic emerging industries represented by " Made in China 2025" and to maintain its leading position in the high-tech field. And the trade war will also be a protracted war, which may be long-term and normal.
The negative impact on the global economy of launching a trade war today, when the division of labor and cooperation in the global economy are getting closer and closer, is obvious and indeed casts a shadow on the domestic IC industry and even the entire electronic information industry, not only affecting more system manufacturers and component manufacturers, but also affecting the overall output of China's electronic manufacturing industry.
The ZTE incident has fully demonstrated the heavy dependence of the domestic semiconductor industry chain on foreign countries, but the Sino - US trade war will force system manufacturers to cooperate more with domestic component manufacturers and devote more energy to tapping domestic market demand, which is an opportunity in risk. At the same time, it will also inspire the domestic semiconductor industry to face the reality and continuously strengthen its autonomy and self-control in FPGA, GPU, third-generation semiconductor materials, EDA and IP, which are highly dependent on the United States ( with low domestic substitution rate ) in the industry chain. This is a true zero-sum game.
At the same time, we should realize that one of the main reasons for the large trade deficit between China and the United States is that the United States restricts the export of its high-tech products to China. If the trade war between the two sides escalates completely, the United States will cut off the supply of semiconductor core links ( such as equipment, EDA, IP, and components that cannot be designed and produced in China ), which will seriously reverse China's electronic information industry. If Trump further imposes tariffs on products worth 267bn US dollars, almost all Chinese imports will be affected, including iPhone and all other smartphones.
Such " deterioration" will have to be prevented. Although the United States wants to relive the old dream of the 1980' s trade war with Japan, history has already turned over. The global semiconductor market is in China, which is the most important card for us to develop our national industry. How can we play the cards that are not very good?