President Donald Trump stated that his administration intends to declare tariffs on chips and semiconductors as early as next week, on Tuesday’s episode of CNBC’s Squawk Box.
The details of these tariffs are still unknown, though. With yet another significant event, the year of the semiconductor industry continues to be a rollercoaster.
US hardware and AI industries may see significant disruptions as a result of such tariffs. The United States only manufactured only 10% of the world’s chips when the CHIPs and Science Act was adopted in 2022, offering $52 billion in subsidies to increase local chip manufacturing.
Despite this modest manufacturing presence, the United States is home to the headquarters of more than half of the world’s semiconductor companies.
Since then, efforts to increase local chip manufacturing have made modest headway. The CHIPs Act has provided funds to Taiwan Semiconductor Manufacturing Company (TSMC) and Intel. Additionally, TSMC has pledged to invest “at least” $100 billion in U.S. chip production facilities over the following four years.
However, it takes time to establish up chip manufacturing facilities. The difficulties of quickly increasing output were recently brought to light by Intel’s announcement that it was postponing the construction of its chip fabrication facility in Ohio.
The news of tariffs coincides with the industry’s anticipation of the administration’s decision about export restrictions on AI chips, which govern which nations are permitted to buy cutting-edge semiconductors used in AI systems.
In May, the Biden administration’s chip AI export regulations were formally revoked by the Trump administration. These regulations had created a multi-tiered, nation-specific strategy for limiting chip exports on the basis of national security considerations.
The Trump administration then unveiled its AI Action Plan in July, which focused on the necessity of the United States enacting export limits on chips but provided few specifics about how that may be done.
The Trump administration is currently discussing whether or not to carry out its proposal to repeal and replace Biden’s AI export regulations, according to research from Semafor that cited industry sources.
