MW Why Intel's stock is falling on the latest twist in the China tariff saga

By Therese Poletti

Texas Instruments' stock is also tumbling as investors worry about the company's domestic manufacturing footprint in light of China's tariffs against the U.S.

Shares of Intel Corp. and Texas Instruments Inc. were among the biggest decliners in the chip sector on Friday, as newly published rules from China were interpreted as potentially costly for U.S. semiconductor companies that make chips in the U.S.

China and the U.S. have been announcing various trade measures against one another, and while raw semiconductors have been so far exempt from President Donald Trump's tariffs on China, analysts note that China has its own levies against the U.S., which seem to target U.S. companies that make chips domestically.

Bernstein Research analysts noted that the China rules appear to contain a surprising element in terms of how the country determines whether chips are U.S.-made. The "origin point" will be the location of the fabrication plant, not where a chip gets packaged.

"This was a big surprise to the market as investors generally consider the location of packaging to be the country of origin, not the fab, and it is way more difficult to shift fabs and will bring bigger impact," the analysts said in a note to clients.

The Bernstein team, led by analysts Qingyuan Lin and Stacy Rasgon, also pointed out that for U.S. companies like Intel, Texas Instruments and Analog Devices Inc., "the rules may make it tougher to avoid Chinese tariffs, or at least require some rejiggering of manufacturing locale and logistics."

Shares of Intel Corp. $(INTC)$ were down 5%, shares of Texas Instruments Inc. $(TXN)$ were falling 8%, shares of Analog Devices Inc. $(ADI)$ were off 4% and shares of Micron Technology Inc. $(MU)$ were down 2%.

The Bernstein note said that while many of these companies also have manufacturing sites in other countries around the world, Intel specifically could have real issues, owing to just how globalized the company's business is. The company has parts going to and coming from China, so some chips made at fabs in China could go into products like PCs that will be hit by tariffs on the U.S. side too.

Lin and Rasgon noted that the tariffs could also make Texas Instruments' general-purpose analog chips more expensive, at least in the short term. That may also motivate customers to shift to local vendors whenever possible.

They pointed out that Texas Instruments is already under enormous competitive pressure in China, stemming from local analog chip makers. In 2023, Texas Instruments cut its average selling prices by about 30%, a strategy that didn't drive big market-share gains.

The recently posted rules in China could be subject to different interpretations, as they state that "the goods are considered to originate from where the last substantial transformation occurred," according to Bernstein. China considers the fabrication plant as that venue, but it's feasible that U.S. companies could try to make arguments that packaging or other assembly resulted in a more substantial transformation of their products.

The broader Philadelphia Semiconductor Index SOX was about flat on Friday.

-Therese Poletti

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April 11, 2025 12:24 ET (16:24 GMT)

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