The returning Trump administration in 2025 will embody its “America First” and “Made in America” message more than ever. President Trump stated that he will introduce tariffs on imports of up to 25%, especially considering that the duty rate on Chinese goods exceeds 60%. Trump is also adamant about American independence in the semiconductor industry in the computer and technology sector. Trump said he was convinced that Taiwan had stolen the American chip industry.
President Trump has criticized the US CHIP Act and the Inflation Reduction Act. Vivek Ramaswamy, co-head of the Department of Government Efficiency (DOGE), also criticized the policies and plans to scrutinize wasteful subsidies. Here are two of the most important semiconductor companies in the computer and technology sector that are facing additional trade restrictions and consequences from the Trump administration.
Taiwanese semi-finished product: making the AI revolution possible in the US
Taiwan Semiconductor Manufacturing Company New York Stock Exchange: TSM not only produces the majority of chips for leading US semiconductor companies such as Apple Inc. NASDAQ:AAPL And QUALCOMM Inc. NASDAQ:QCOMbut it also has a literal monopoly on artificial intelligence (AI) chips, including GPUs and application-specific integrated circuits (ASICs). The AI boom is only possible because Taiwan Semi produces AI chips for NVIDIA Company NASDAQ: NVDA, Applied Micro Devices Inc. NASDAQ: AMD, Broadcom Inc. NASDAQ: AVGOAnd Marvell Technologies Inc. NASDAQ:MRVL. This makes Taiwan a major trading partner of the United States.
If Trump imposes his 10% tariffs on chips made in Taiwan, continuing the artificial intelligence boom will cost more. However, the head of Taiwan’s central bank doubts this will happen. Taiwan-based Semi gets most of its revenue from the US, about 65%, and 10% to 12% of its revenue from China. Leading hyperscalers such as Google, Amazon and Microsoft Company NASDAQ: MSFT are in the process of creating their own artificial intelligence chips based on Taiwan Semi, usually through Broadcom or Marvell Technology. Even Tesla Inc. NASDAQ:TSLA relies on Taiwan for its chip supplies.
Threat of Chinese invasion of Taiwan by 2027
Since Taiwan Semi produces 90% of the world’s most advanced computer chips, China’s control of Taiwan poses a serious global threat. Chinese President Xi Jinping has publicly stated that he wants Taiwan back under Chinese control. Beijing believes Taiwan is part of its territory, but Taiwan claims it is not. China has stepped up military activity around Taiwan. On February 2, 2024, US Central Intelligence Agency (CIA) Director William Burns stated that Xi had already ordered his military to prepare to invade Taiwan by 2027. However, analysts doubt that this will come to fruition, especially during Trump’s second term. term.
Canceling $7 billion in Chips Law payments to Taiwan
Taiwanese company Semi is building a foundry in Arizona and is set to receive $7 billion under the CHIPS Act. Trump has said he opposes giving money to foreign companies to build factories in the United States. He doesn’t believe that advanced chips will be created here at all. The Taiwan branch has not yet received the funds, and the threat of them being canceled or suspended unless Trump’s inauguration dissipates them is high. Trump will naturally favor domestic semiconductor companies building foundries in the United States, e.g. Intel Company NASDAQ: INTK, Texas Instruments Inc. NASDAQ: TexasAnd GlobalFoundries Inc. NASDAQ: GFS.
ASML: More potential consequences of China’s trade restrictions
To make computer chips, you need photolithography machines. ASML Holding N.V. NASDAQ: ASML manufactures extreme ultraviolet (EUV) photolithography machines needed to make CPUs, GPUs and ASICs. Although the Netherlands-based company sells deep ultraviolet (DUV) machines to China, they have never sold their most advanced EUV machines due to restrictions imposed by the Dutch government. The Dutch government agrees with the United States in its belief that China poses a threat. The country’s Foreign Ministry says: “The Netherlands shares America’s concerns about the uncontrolled export of advanced semiconductor equipment.”
United States imposed its third crackdown in three years, tightening regulations on semiconductor equipment and export up to 140 Chinese companies. ASML said it would be impacted by restrictions on sales of DUV lithography machines to China, but expected the long-term impact to be minimal. ASML expects to get 20% of its sales from China, but this has fallen from 50% in 2024.
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