President Trump Proposes 25% Tariffs on Chips as Taiwanese Manufacturers Plan Production Shift to the US

This article does not constitute investment advice. The author holds no shares in any of the companies referenced herein.

Trump’s Tariff Plans Shake Semiconductor Industry

Recently, President Donald Trump elaborated on his intention to impose significant tariffs on semiconductor imports during a press briefing at Mar-a-Lago. He has indicated that the tariff rates would be set at 25% or higher and could escalate throughout the year, stirring considerable concern within the semiconductor sector. Companies are reportedly responding preemptively by backordering their products in anticipation of future tariffs.

Opportunity for Domestic Manufacturing

During the briefing, Trump emphasized his administration’s commitment to providing U. S.chip manufacturers adequate time to relocate their operations to the United States. He assured that once these companies establish production facilities domestically, they would be exempt from tariffs.“We want to give them time to come in, ”he stated, underscoring a desire to support U. S.production and the semiconductor industry’s growth on home soil.

The President’s remarks come amid broader discussions surrounding tariffs on various industries, including autos and pharmaceuticals, showcasing his administration’s aggressive trade tactics aimed at reshaping U. S.manufacturing dynamics.

Taiwanese Companies Eyeing U. S.Investment

In conjunction with Trump’s announcement, several major Taiwanese AI server manufacturers are reportedly exploring the potential of establishing production in the United States. According to sources from the Economic Daily, seven firms—among them Pegatron, Wistron, Quanta Computer, Wiwynn, and Inventec—recently visited Texas to assess investment opportunities. They are expected to unveil their plans before May 10th, signaling a potential shift in the semiconductor manufacturing landscape.

Industry estimates suggest that the financial outlay required for land acquisition and factory construction could reach around $2 billion. With additional investments in automation, costs may surge between $3 billion and $5 billion. Many Taiwanese firms currently operate in Mexico and are increasingly concerned about the financial implications of potential tariffs.

Collaborations Amidst Trade Tensions

While Foxconn and Pegatron have chosen not to disclose specifics about their recent trip, Quanta has expressed intentions to expand its U. S.manufacturing footprint, and Wiwynn remains open to enhancing its presence in the country. These developments come amid reports that the Trump administration is intensifying pressure on Taiwan’s TSMC to either acquire Intel’s semiconductor foundries or consider alternative collaborative arrangements.

In a related note, there are growing indications that Intel is advancing its partnership with Taiwan’s United Microelectronics Corporation (UMC).This collaboration aims to leverage UMC’s manufacturing capacity to mitigate the effects of tariffs on chips imported into the U. S.UMC is primarily focused on producing chips on mature technology nodes and will partner with Intel for nodes of 12-nanometer and higher.

The evolving landscape of U. S.-Taiwan semiconductor relations illustrates a strategic pivot towards domestic manufacturing amid escalating trade tensions. This situation not only reflects the urgency to maintain competitive advantages but also underlines the intricate web of international trade and production strategies as companies navigate the complexities of tariff implications.

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