Texas Instruments (TXN) shares plummeted 9.46% in pre-market trading on Friday, following reports of China's new retaliatory tariff rules that specifically target US-based semiconductor manufacturers. The sharp decline reflects investor concerns over the potential impact on the company's business in the crucial Chinese market.

According to a notice from the state-backed China Semiconductor Industry Association, China plans to impose hefty tariffs on chips made by US companies that operate their own manufacturing facilities within the United States. Texas Instruments, along with other major players like Intel, Analog Devices, and ON Semiconductor, may face tariffs as high as 84% or more on their products entering China.

In contrast, the new rules appear to exempt US chipmakers that outsource their manufacturing to other countries, such as Taiwan. This selective approach puts Texas Instruments at a significant competitive disadvantage compared to firms like Qualcomm and AMD, whose chips will be classified as Taiwanese origin and thus avoid the high tariffs. The market's reaction underscores the potential for these tariffs to substantially impact Texas Instruments' revenue and market share in China, a key growth market for the semiconductor industry.