Tariffs Topple Subsidies: Semiconductor Industry Braces for Impact
Trump’s return signals a seismic shift in semiconductor policy. The CHIPS Act faces uncertainty as the new administration leans towards high tariffs over subsidies. In a recent interview, Trump blasted the CHIPS Act, saying, “That chip deal is so bad. We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway”. This move could reshape the industry, potentially driving more chip manufacturing to U.S. soil but risking higher prices and global supply chain disruptions. Taiwan’s semiconductor giants, particularly TSMC, brace for impact as Trump’s tough stance threatens to upend their market dominance.
Silicon Valley’s Talent Drought: Innovation at Risk
The high-tech industry faces a double-edged sword under Trump’s renewed “America First” policy. While efforts to restore manufacturing could boost domestic tech jobs, stricter immigration policies threaten to choke off the flow of global talent. Tech giants may struggle to fill crucial positions as visa restrictions tighten, potentially slowing innovation and growth. As Sanjay Patnaik, a senior fellow at the Brookings Institution, notes, “I would expect some of [the workforce development requirements] to be softened under Trump.”
U.S. vs. China: Tech Cold War Intensifies
Trump’s second term is set to ratchet up tensions in the ongoing tech rivalry with China. Expect tougher export controls on advanced semiconductor technology and increased pressure on Chinese tech firms. Trump’s stance on Taiwan is particularly concerning for the industry. He recently stated, “You know, Taiwan, they stole our chip business… and they want protection”. This escalation could lead to a more fragmented global tech ecosystem, with diverging standards and reduced international collaboration. As Patrick Moorhead, CEO of Moor Insights & Strategy, warns, “Under a Trump presidency, there are potentially big tariffs against China, which, as we have seen before, will elicit a China reaction as we saw with Micron.” This refers to China’s ban on Micron Technology’s chips in May 2023, which was a direct response to U.S. export controls and tech sanctions.
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Credit: Jeffrey Cooper, perplexity