The Chip Market Amid Tariff Disputes: Huaqiangbei Merchants Hoard Goods Awaiting Price Hikes, Domestic Semiconductor Producers Have Received "Replacement" Orders

"Everyone is now in a wait-and-see mode, with inventories being locked up, as people fear prices might skyrocket or plummet," a shop owner in Shenzhen's Huaqiangbei told Cailian Press. The recent escalation of the tariff war, with the US frequently changing its policies, has made the impact on the global chip industry highly uncertain. Cailian Press reporters visited Huaqiangbei, known as "China's First Electronics Street," and found that many shops have suspended quotes for popular chips like CPUs and GPUs, with several shops closed, holding onto their stocks in anticipation of price increases. Simultaneously, Cailian Press learned from multiple sources in the chip industry chain that US-based IDMs might be the most affected by the tariff war, with prices for some chips like memory and MCUs expected to rise. In contrast, several domestic consumer electronics component publicly listed firms stated that the actual impact of the tariff war is limited due to the low proportion of US chip business. Meanwhile, multiple semiconductor industry chain insiders mentioned that they have received more inquiries from domestic clients since the new tariff policy was introduced. "For products involving US origin, some downstream clients have already started discussing the feasibility of (domestic) alternatives with us," a senior executive at a listed electronic component distribution company told Cailian Press. Huaqiangbei's popular chip merchants are holding onto their stocks, waiting for price increases. On the morning of April 14, in Shenzhen's Huaqiangbei, Cailian Press reporters found that many shops selling popular chips like CPUs and GPUs were closed. "Several CPU shops closed last Friday and have suspended operations," a shop owner told reporters. When asked about the prices of NVIDIA's 5090 and 5080 GPUs, as well as CPUs from Intel and AMD, a Huaqiangbei computer assembly shop owner said that prices are currently unavailable because upstream channels are locking up inventories and waiting. "There is significant uncertainty in the prices of newly arrived products. Everyone is afraid of selling at a loss or being stuck with high-priced inventory," the owner said. "Prices change daily. Last week, I configured a computer for a corporate client for 5,000 yuan. After the client was satisfied, they wanted to order more, but within a week, the price for the same configuration rose from 5,000 yuan to 5,200 yuan and then to 5,800 yuan, so the client decided to hold off," the computer assembly shop owner added. "Prices are definitely fluctuating these days. Many spot dealers for US-branded components are now hoarding or holding back from selling," a veteran component industry insider told Cailian Press. Yang Shengxin, a senior analyst at Sigmaintell's semiconductor division, also told Cailian Press, "Price increases have already started, and the suspension of quotes is due to the rapid price changes." However, not all chip quotes are affected by the tariff turmoil. When discussing memory chips, several producers said that although prices are rising, there is still spot availability, and price fluctuations are expected to be relatively small. A Huaqiangbei computer assembly shop owner told Cailian Press that he has already stocked up on a small batch of domestic solid-state drives. A procurement manager at an AI company told Cailian Press that the company's chips are generally imported through agents, and normal quotes are still being provided without significant price increase notifications. The company is still investigating potential future price increase risks, and the manager emphasized, "Besides tariff increases, there might also be exchange rate fluctuation risks." "Our TI materials are processed in the US and packaged and tested in Southeast Asia. We have confirmed with various agents, and the feedback is that there are no immediate plans for price increases, but agents suggest stocking up appropriately," the manager added. Additionally, Cailian Press reporters noticed that many shops in Huaqiangbei specializing in non-popular categories like diodes, LED power supply chips, and microcontrollers are still operating normally and providing quotes. A shop owner specializing in Rohm brand products said that spot supplies are sufficient and that they can communicate if there is demand. A senior executive at a publicly listed company told Cailian Press that the suspension of quotes is both a supplier and corporate behavior. "After all, this tariff event is too sudden, and everyone needs to assess. Suppliers need to evaluate what standards to use for quotes, and companies will also assess whether they still want to buy. This cannot be determined in a few days, and we may need to wait and see if there are any new changes," the executive said. The veteran component industry insider further told reporters that most products are not in short supply in the market, and there is still a lot of inventory. Whether it's the original manufacturers, agents, spot dealers, or clients, everyone has spot supplies. Inventories have not been digested, and demand has not increased. Moreover, with such high price increases, the market will find it difficult to digest. "I believe the outcome is likely that spot dealers will increase prices by 30-50 points, and this wave will have peaked. Now is actually a good opportunity for some spot dealers to quickly digest inventories and exit," the insider said. US-based IDMs might be the most affected, with some chip channel prices expected to rise. Currently, based on responses from several publicly listed companies involved in electronic component distribution, the recent "tariff war" has had a limited actual impact on their businesses. Cailian Press reporters, posing as investors, called Digital China (000034.SZ), and the securities department stated that the tariff war has had little impact on the company's IT distribution business. "The actual proportion of imports from the US is very small, with most coming from manufacturers or production lines in Southeast Asia or mainland China," the department said. A securities department representative from China Electronics Huada (001287.SZ) told Cailian Press reporters posing as investors, "The proportion of chips from the US is in the single digits, so the impact of the tariff war is limited." Shenzhen Huaqiang (000062.SZ) recently issued an announcement stating that the direct impact of the current tariff policy changes on its operations is limited. On the procurement side, a preliminary check of all SKUs distributed by the company last year found that fewer than 100 SKUs originated from the US, accounting for only about 0.2% of the company's total procurement value. On the sales side, last year's export business accounted for about 2% of the company's total revenue, with virtually no exports to the US. Yingtan Intelligent Control (300131.SZ) also told Cailian Press that it has no chips originating from the US and is therefore unaffected. Last Friday, the China Semiconductor Industry Association issued an urgent notice stating that, according to relevant regulations from the General Administration of Customs, the origin of "integrated circuits" is determined based on the four-digit tariff code change principle, meaning the processing location is considered the origin. Following this news, stock prices of companies including Texas Instruments, Intel, GlobalFoundries, and Micron fell. Cailian Press reporters inquired with Intel about the impact but had not received a response by the time of publication. "The main impact is on manufacturers with processing in the US, especially IDMs. Design companies mostly outsource to non-US foundries like TSMC and Samsung, so the impact is relatively smaller," Yang Shengxin analyzed for Cailian Press. Zhang Junya, a senior analyst at LeadLeo Research Institute, told Cailian Press that the relevant tariff policies will mainly impact IDM companies with wafer fabs in the US and IC design companies relying on US wafer fabs for foundry services, such as analog chip manufacturers (Texas Instruments, ON Semiconductor, Analog Devices), logic chip manufacturers (Intel), memory chip manufacturers (Micron), and a few IC design companies (Qorvo). In the short term, this will cause order suspensions and inventory build-up. If they cannot avoid tariffs by relocating capacity, they may be forced to raise prices. In the long term, this might compel US companies to move wafer production capacity to regions outside the US, such as Southeast Asia and Europe, but the cost of relocating production lines is extremely high. However, it is worth noting that the aforementioned regulation will not affect design companies that outsource to non-US wafer fabs, including NVIDIA. An NVIDIA industry chain insider told Cailian Press that the US tariff policy currently has a limited impact. Last week, Cailian Press reported that, taking NVIDIA's H20 chip, which has been in high demand this year, as an example, "supply is tight, and current deliveries are insufficient, but the short-term tightness is mainly due to real demand and precautionary stockpiling to avoid bans, not due to tariff policy impacts." According to Yang Shengxin's observations, under the recent tariff war, most domestic fabs have reported no significant impact, and domestic design companies' clients are mainly local manufacturers, so the impact is relatively small. It is worth noting that the US has frequently changed its tariff policies. On April 12, Eastern Time, the US released a relevant memorandum exempting some products like computers, smartphones, semiconductor manufacturing equipment, and integrated circuits from "reciprocal tariffs." However, over the weekend, White House officials said that Trump is about to release a Section 232 research report targeting semiconductors; US Commerce Secretary Lutnick also said that electronics will be included in the upcoming industry tariffs and will be implemented within about a month. Zhang Junya told Cailian Press that CPUs, AI chips, and automotive-grade power devices are currently in low self-sufficiency rates in China. For example, Intel and AMD's high-end processors still dominate in servers and PCs, and TI and ON Semiconductor's IGBTs and MOSFETs are highly irreplaceable in the new energy vehicle sector. "But whether the tariff policy will have an impact mainly depends on whether the chip's origin is the US, not whether it is self-sufficient. Currently, these chips are still mainly outsourced to non-US foundries. However, it is inevitable that channel dealers will take the opportunity to raise prices, and channel prices for memory and MCU chips will rise to some extent," Yang Shengxin believes. Domestic manufacturers say they have received "alternative" orders, and localization acceleration has become a consensus. In Zhang Junya's view, the recent tariff war will generally accelerate the localization process in the semiconductor field, especially in consumer electronics and industrial control (such as analog chips and MOSFETs). Domestic wafer fabs will also accelerate the development of high-end products (like SMIC) and ChangXin Memory (DDR6/HBM). At the same time, semiconductor equipment/material suppliers will get more verification opportunities, and domestic packaging and testing manufacturers will also receive more orders. "For products involving US origin, some downstream clients have already started discussing the feasibility of (domestic) alternatives with us," a senior executive at a listed distribution company told Cailian Press. He believes that the relevant policy changes will bring benefits to the domestic chip industry. "In the short term, chips that cannot be imported will need alternative products. In the long term, this will encourage everyone to increase the proportion of domestic chip procurement to prevent more extreme situations. The trend is certain, but the replacement process will take time, and supporting designs, software, and processes may need adjustments. The pace of product replacement varies by company and cannot be generalized," he said. A domestic third-generation IDM manufacturer also believes that localization will accelerate and stated that they are already communicating with downstream clients. "However, the market has not reacted so quickly. There is a time process from introduction to mass production," the manufacturer said. When Cailian Press asked about the proportion of US chips in Digital China's IT distribution business, a company representative said, "We have not specifically broken it down, but the proportion of domestic brands is continuously growing." "After the tariff war, downstream demand (for domestic equipment) has increased, and some clients have already come to us for consultations," a domestic semiconductor equipment supplier also told Cailian Press. Another domestic memory manufacturer also agreed with the view that the tariff war benefits localization but admitted to Cailian Press, "We prepared early, but currently, demand is still manageable." He analyzed, "Because the supply chain is too long, with hundreds of types of equipment, there are still many localization options in the supply chain. Even for categories that cannot be completely avoided, suppliers can initiate exemption applications. However, some domestic supplier equipment may still contain US-origin components, so it cannot be generalized." It is worth noting that the growth of domestic products has become an important source of performance growth for some dealers. Shenzhen Huaqiang announced today that it expects Q1 net profit attributable to the parent company to be between 96.44 million yuan and 114.81 million yuan, up 68%-100% YoY. The company continues to deepen cooperation with key product lines and clients, actively explores the market, achieves steady business growth, and increases the promotion of domestic semiconductor brands. During the reporting period, the sales revenue of domestic product lines became the main source of the company's revenue growth.