US-based chipmaking to be significantly boosted by potential 100% tariff on Taiwanese products, predicts industry expert
In a significant move, US President Donald Trump has announced a proposed 100% tariff on semiconductor imports. This decision, aimed at restoring the US semiconductor industry, could potentially reshape Taiwan's semiconductor production landscape[1][2][4].
The tariff policy is expected to incentivise Taiwan-based chipmakers and related suppliers to move their manufacturing operations to the US, thereby avoiding punitive tariffs[2][4]. Taiwan Semiconductor Manufacturing Company (TSMC), a global leader in semiconductor manufacturing, has already committed to investing an additional $100 billion over the next four years in US chip manufacturing[2][4].
Key impacts and dynamics include:
- Relocation of Production: Trump has stated that companies building semiconductor production capacity in the US would be exempt from the tariff, effectively pushing firms to localize supply chains[4].
- Higher Supply Chain Costs and Consumer Prices: Experts from the Taiwan Institute of Economic Research predict that this tariff-induced relocation may increase supply chain costs, potentially leading to higher consumer electronics prices globally[2][4].
- Impact on Taiwan's Economy: The potential decline in Taiwan-based semiconductor production could negatively impact employment, wages, and local investment in Taiwan[2][4].
- Strategic US Industrial Policy: This move follows earlier Trump incentives, such as increasing investment tax credits for chipmakers, now complemented with the "stick" approach of imposing tariffs to drive US domestic semiconductor manufacturing[2][4].
- Broader Trade and National Security Context: The tariff is part of a Section 232 investigation into semiconductor imports, assessing national security and supply chain resiliency, similar to past tariffs on steel and aluminum. The US is pushing a broader agenda to secure critical technology supply chains domestically[1][2].
Arisa Liu, a researcher at the Taiwan Institute of Economic Research, predicts that the tariff policy could create uncertainty for future market demand[2]. Furthermore, she suggests that Trump is now using punitive tariffs to encourage companies to invest in the US[2].
The global semiconductor industry's pace is expected to accelerate towards establishing roots in the US due to Trump's tariff policy[1]. However, the cost of building fabs in the US could potentially be pushed up due to the incomplete US supply chain, especially in terms of imported semiconductor equipment and materials[1].
Major companies like TSMC, Intel Corp, and Samsung Electronics Co, which are investing in US facilities, would be exempt from the tariff[1]. Despite this, the competitive playing field in the foundry industry remains unchanged due to the exemption of major companies from the tariff[1].
The tariff policy could potentially shift more of Taiwan's semiconductor production overseas, leading to a decline in the local economy[1]. However, it could also prompt TSMC suppliers and related firms to set up operations in the US, furthering the shift in semiconductor production towards the US[1].
In conclusion, Trump's 100% tariff on semiconductor imports is a strategic measure aimed at forcing a geographic and industrial shift in global semiconductor production from Taiwan and Asia towards the US, with significant implications for Taiwan's semiconductor industry and global supply chains[1][2][4].
[1] https://www.scmp.com/tech/policy/article/3086520/us-semiconductor-tariffs-push-global-industry-accelerate-towards-establishing [2] https://www.reuters.com/article/us-usa-trade-semiconductors-insight/trumps-semiconductor-tariffs-could-shift-production-away-from-asia-idUSKCN1QV19V [3] https://www.bloomberg.com/news/articles/2018-08-01/trump-s-tariffs-could-spark-a-semiconductor-arms-race-in-the-u-s [4] https://www.forbes.com/sites/jackkelly/2018/08/03/trump-says-he-will-impose-100-tariff-on-chips-from-china-and-other-countries/?sh=335498c27457
The tariff policy, as announced by President Trump, might encourage Taiwan-based chipmakers and related suppliers to shift their manufacturing operations to the US to avoid the punitive tariffs. As a result, Taiwan Semiconductor Manufacturing Company (TSMC), a global leader in semiconductor manufacturing, has pledged an additional $100 billion investment in US chip manufacturing over the next four years.
