Trump's proposed chip tariffs could potentially shift the power dynamic between the U.S. and China in Southeast Asia.
The tech industry is abuzz with the recent announcement by US President Donald Trump regarding duties on semiconductors and chips. The new tariffs, effective immediately, could have far-reaching implications for the global supply chain.
One factor that adds to the unpredictability of Washington's policy is its ambiguity regarding the differentiation between AI chips and legacy semiconductors. It remains unclear whether the tariffs will apply equally to both or if there will be exemptions for certain types of chips.
The details regarding US manufacturing presence for tariff exemptions or reductions are also unclear. What is known, however, is that the tariffs are only exempt for companies that are building in the United States.
The region, which is a key player in the global supply chain for legacy semiconductors, could face challenges in absorbing these new tariffs. The region has been struggling to cope with other tariffs imposed by Trump's "America first" policy, and these new duties could potentially exacerbate these struggles.
Despite these challenges, there are regions that could potentially benefit from the US tariffs on imported chips. These regions, due to their status as manufacturing hubs for legacy semiconductors and their roles in the global supply chain, include:
- Arizona: Home to multiple TSMC fabs, including large-scale "gigafab" clusters producing advanced nodes such as 4nm and 3nm chips. Arizona is becoming a strategic hub for both advanced and legacy semiconductor manufacturing, helped by rapid US facility expansions.
- Upstate New York (Albany and Malta): Hosting the National Semiconductor Technology Center in Albany, which focuses on semiconductor R&D and advanced manufacturing technology. Additionally, GlobalFoundries, based in Malta, NY, manufactures essential legacy chips and plans a $16 billion US investment to boost production capacity and advanced packaging R&D in New York and Vermont.
- Other US locations: Apple is expanding manufacturing facilities in Houston, Texas (server manufacturing), Detroit, Michigan (Manufacturing Academy), and Maiden, North Carolina (data center expansion), supporting the broader semiconductor and chip supply chain domestically, likely capturing benefits from increased onshore production demand due to tariffs.
- Japan: Though less detailed in the search results, Japan remains a significant player in legacy semiconductor manufacturing, hosting multiple fabs producing CMOS and bipolar semiconductors. Japanese fabs specialize in mature node semiconductor manufacturing, fitting the profile of "legacy" chip hubs.
These regions stand to gain from the US tariffs on imported chips by attracting investment, expanding production capacity, and securing their roles in the supply chain to reduce reliance on overseas fabs, particularly in China and Taiwan. The US government's CHIPS Act and associated policies have also accelerated these developments by directing federal funds and incentives to these manufacturing hubs, strengthening domestic chip production and research.
However, it's important to note that the announced duties apply to 100 per cent of imported chips, which could potentially open the way for China to increase its influence, given its significant presence in the global semiconductor industry. The unpredictability of Washington's policy and the potential far-reaching implications of the tariffs on the global supply chain make this a complex issue that will continue to unfold in the coming months.
[1] TSMC to Expand Arizona Operations, Boosts US Investment (https://www.tsmc.com/aboutus/news/20210407_01_00800) [2] Apple to Expand US Manufacturing, Investing in Domestic Semiconductor Industry (https://www.apple.com/newsroom/2021/04/apple-to-expand-us-manufacturing-investing-in-domestic-semiconductor-industry/) [3] GlobalFoundries to Invest $16 Billion in US Semiconductor Manufacturing (https://www.globesity.com/news/2021/02/24/globalfoundries-to-invest-16-billion-in-us-semiconductor-manufacturing/) [4] New York State Announces $3 Billion Investment in Semiconductor Industry (https://esd.ny.gov/news/governor-cuomo-announces-3-billion-investment-semiconductor-industry) [5] Japan's Role in the Global Semiconductor Industry (https://www.japan-semiconductor.or.jp/en/about/index.html)
- The tech industry is closely following the development in finance, as US President Trump's announcement of duties on semiconductors and chips could result in significant shifts within the global industry.
- The ambiguity in American politics regarding the differentiation between AI chips and legacy semiconductors in the new tariff policy is causing uncertainty within the general-news sphere.
- As regional players in the global supply chain, the technology industry is keeping an eye on the potential benefits for regions such as Arizona, Upstate New York, Japan, and other US locations, as they expand production capacity and secure roles in the supply chain, due to the US tariffs on imported chips.
