Importation of semiconductors and chips at a mind blowing 100% tariff. This recent decision has raised significant alarm across the semiconductor sector, an important industry worth more than $600 billion. This innovative industry supports the infrastructure for today’s digital economy—impacting everything from our smartphones to cloud computing.
The proposed tariffs include exemptions for companies that are “building in the United States.” The second key economic aspect of the policy provides strong incentives for domestic production. It introduces a great deal of confusion about what these exemptions actually look like in practice. Industry leaders are left questioning whether chip imports manufactured by companies like TSMC, which has substantial investments in U.S. facilities, will be exempt from the tariffs.
Apple’s CEO, Tim Cook, has publicly stated that Apple plans to source chips from Samsung’s production plant located in Texas. This decision dovetails perfectly with the administration’s efforts to strengthen American manufacturing capacity. Shares of TSMC and Samsung were surging in Thursday morning trading after Trump’s announcement. This wave reflects tremendous enthusiasm for their sustained commitment to building in the U.S.
Earlier this year, TSMC reiterated its commitment to expanding its investments in the U.S. to $165 billion. This kind of commitment is part of a larger trend across the industry. Since 2020, TSMC and Samsung have each committed hundreds of billions of dollars to build manufacturing facilities in the country. By comparison, the U.S. imported $46.3 billion in semiconductors in 2024, or about 1% of total U.S. imports.
Cloud service providers such as Amazon Web Services and Google are critical to Washington’s laudable, but heavily dependent on private sector clout, ambitious artificial intelligence plans. On top of that, they disproportionately consume semiconductors in the U.S. As these companies continue to grow, their technological needs are increasing, and these companies are indeed dependent on a reliable supply chain.
They’ve just inked another $100 billion worth of investments in the U.S., bringing their total commitments to a jaw-dropping $600 billion over the next four years. This commitment supports ongoing efforts to ensure far and away the most effective and reliable semiconductor supply chain in the world remains that way.
Industry analysts are already tentatively optimistic or pessimistic over the influence these announcements from Trump may have. Stacy Rasgon of Bernstein argued that tariffs on semiconductor imports would be inescapable. She cautioned that larger, more sweeping tariffs would lead to more pronounced disruptions. Rasgon raised a pertinent question regarding the specifics of the exemptions:
“Does that mean those [chip imports] would not be tariffed, because they’re made at TSMC, and TSMC is building in the U.S….? I don’t know. Hopefully that’s how it would be.” – Stacy Rasgon
Furthermore, Rasgon pointed out that there are still many uncertainties surrounding which products will be affected by the tariffs:
“What we don’t know with [Trump’s] comments on tariffs, is it just raw semiconductors? Are there going to be tariffs on end devices? Are you going to be looking at tariffs on components within end devices?” – Stacy Rasgon
The U.S. semiconductor supply chain is complex, integrated and interdependent. It’s imperative that industry leaders recognize the possible impacts of this complexity. Ray Wang from The Futurum Group emphasized that it remains too early to determine the full impact of these tariffs on the semiconductor sector:
“It’s still too early to pin down the impact of the tariffs on the semiconductor sector.” – Ray Wang
In reaction to these positive developments, J.P. Morgan’s James Sullivan offered his two cents. He thinks all the major big chip OEMs will likely get exemptions from the tariffs. He added that this would lead to a consolidation of market share among larger players in the semiconductor space:
“continuing to consolidate market share amongst the largest cap players in the space.” – James Sullivan
The entire industry is still reeling from these accursed proposed tariff changes. It’s charting a new path through that thick underbrush past both new opportunities and a lot of unknowns. The eventual result of these conversations could very well determine the future of semiconductor manufacturing in the United States and abroad.