US president Donald Trump has revealed that he will be announcing semiconductor tariffs “over the next week”. However he said that he would be willing to be flexible on some firms in the industry.
This follows an earlier US customs notice which said that computers, smartphones and certain other electronics would be excluded from the 125% tariffs on Chinese goods coming into the US.
However, Trump later refuted this on his social media platform, Truth Social, calling the reports about such an exemption notice fake and emphasised that these goods were not exempt, but only moving to a different tariff “bucket”.
“There was no Tariff “exception” announced on Friday. These products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff “bucket. The Fake News knows this, but refuses to report it” Trump said.
“We are taking a look at Semiconductors and the WHOLE ELECTRONICS SUPPLY CHAIN in the upcoming National Security Tariff Investigations. What has been exposed is that we need to make products in the United States, and that we will not be held hostage by other Countries, especially hostile trading Nations like China, which will do everything within its power to disrespect the American People,” he continued.
These tariffs are likely to be introduced under Section 232 of the Trade Expansion Act of 1962, which lets the US president launch tariffs to protect the country’s national security.
But which companies are likely to be impacted by Trump’s upcoming semiconductor tariffs?
Nvidia
US semiconductor tariffs could be a double-edged sword for American tech giant Nvidia, which had a market capitalisation of $2.7 trillion (€2.4tn) as of April. This is because the company relies on a number of foreign partners such as South Korea’s SK Hynix, Taiwan’s TSMC and Dutch chip giant ASML.
SK Hynix is the world’s biggest manufacturer of high-bandwidth memory (HBM) chips, with over 50% of the worldwide market share. These kinds of chips are essential to Nvidia’s artificial intelligence (AI) computing products.
On the other hand, TSMC is the biggest semiconductor foundry in the world and makes Nvidia’s sophisticated graphics processing units (GPUs), mainly by using its advanced 4nm and 5nm process nodes.
ASML is also crucial to Nvidia, because of its extreme ultraviolet lithography (EUVL) machines, which are vital in making the intricate patterns on sophisticated chips. Nvidia uses ASML’s EUVL technology for the manufacturing of GPUs and advanced AI chips.
Therefore, these US tariffs could make Nvidia particularly vulnerable, with the company either having to pay much higher costs for these chips and technology, or scramble to find other domestic US suppliers.
On the other hand, Nividia is also profiting from Trump’s increased push for US manufacturing. The company recently announced that it would be building its AI supercomputers entirely in the US, for the first time ever. This is part of its overall goal of producing $500 billion (€441.3bn) worth of AI infrastructure in the US in the next four years.
This project is expected to create “hundreds of thousands of jobs and drive trillions of dollars in economic security over the coming decades,” according to Nvidia, which will partner with Foxconn, TSMC, Wistron, SPIL and Amkor for this.
The White House called this project the “Trump Effect in action”, saying: “President Donald J. Trump has made US-based chips manufacturing a priority as part of his relentless pursuit of an American manufacturing renaissance, and it’s paying off- with trillions of dollars in new investments secured in the tech sector alone.”
Nvidia’s share price closed 0.2% lower on Monday on the NASDAQ stock exchange.
Intel
Although Intel has significant chip manufacturing operations in the US already. As such, it is seen as vital to the US’s ability to ramp up its onshore semiconductor capacity.
However, Intel still outsources some of its more advanced chip production, especially for mobile processors, to companies like Taiwan. If these chips are hit by US semiconductor tariffs, this may considerably hamper the US’s ability to progress its artificial intelligence industry and compete on a global stage.
Intel also has production bases in Ireland, China, Vietnam, Costa Rica, Malaysia and Israel, which could greatly increase costs for the company as well, once these tariffs come into effect.
Intel imports memory chips and Dynamic Random-Access Memory (DRAM) from SK Hynix, while importing lithography equipment from ASML.
Although it is yet to be specified whether US tariffs will target only finished semiconductor chips or semiconductor equipment as well, Trump’s statement about looking at the whole electronics supply chain suggests the latter might be more likely.
Intel’s shares closed 2.9% higher on Monday on the NASDAQ stock exchange.
TSMC
In 2023, the United States International Trade Commission estimated that Taiwanese chips accounted for about 44.2% of US logic chips, at the segment level.
TSMC is currently the biggest contract chipmaker globally, serving US clients such as Nvidia, Apple, Intel, Qualcomm and Microsoft. In the event of US semiconductor tariffs, although these clients may continue importing chips from TSMC at higher prices initially, they are likely to start looking for other domestic suppliers eventually.
Intel is already attempting to grow its foundry business in order to compete better with TSMC, which could potentially offer the latter’s US consumers with a viable alternative option. In the past, Intel has both collaborated with and competed against TSMC.
TSMC’s share price rose 1.4% on the Taiwan Stock Exchange on Tuesday.
Samsung Electronics
Samsung Electronics is another company which could be hard hit by upcoming US tariffs on semiconductors. The company exports chips to a number of US clients such as Intel, Apple, Nvidia and Qualcomm. Its foundry business also supplies chips to companies such as Tesla, along with several other smaller producers.
As such, it could be particularly vulnerable to a loss in market share caused by some of its long-standing US clients looking for other domestic alternatives.
While some of Samsung’s other exports to US companies, such as image sensors, lithium-ion batteries and displays may not be impacted by semiconductor tariffs, they could still be hit by other US levies, potentially causing another dent in profit margins.
Samsung Electronics’ shares closed 0.7% higher on the Korea Exchange on Tuesday.
Apple
Apple could face a twofold blow from upcoming US semiconductor and electronic tariffs, as the company outsources its silicon chip manufacturing to TSMC. The company also imports chips from SK Hynix and Samsung Electronics. However, Apple designs its own chips.
However, it also relies on US producers such as Micron, Broadcom, Qualcomm, Texas Instruments and STMicroelectronics for chips.
Although the company is working on building domestic semiconductor supply chains and manufacturing capacities in countries like India, this may still take a while, and does not fully address the issue of chip imports for its US market.
Apple also imports a significant number of smartphones from its production facilities in India and China into the US, which could cost the company dearly, once tariffs are imposed. As such, Apple is attempting to take advantage of Trump’s pause on tariffs against India to import 600 tonnes of handsets from Indian factories to the US.
Apple’s shares closed 2.2% higher on the NASDAQ stock exchange on Monday.
