Washington: U.S. President Donald Trump’s recent announcement of a 100% tariff on imported semiconductors has shaken the global tech industry. While the move is intended to push chipmakers to invest in domestic manufacturing, the accompanying exemptions offered to companies like TSMC and Samsung may not provide the long-term comfort markets are hoping for.
Semiconductor giants such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics initially reacted positively to the news. Their shares jumped up to 5% on the promise that their ongoing investments in U.S.-based chip production would earn them exemptions from the steep tariffs. However, analysts warn that these temporary reprieves may ultimately serve as a smokescreen for deeper policy shifts that could permanently alter the industry’s supply chain.
What remains unclear is the scope of the tariffs. The Trump team has not specified whether the 100% levy applies strictly to individual chips or to complex electronic devices containing them such as smartphones, AI servers, and data center equipment. Given that U.S. imports of such devices exceeded $550 billion in 2024, the uncertainty has left the tech industry uneasy.
Another point of contention is the definition of a chip’s "origin." In an industry where design, fabrication, testing, and packaging are often spread across multiple countries, tracking a semiconductor’s nationality is far from straightforward. This makes tariff enforcement complicated and may lead to delays or disputes at customs checkpoints.
While major players with large U.S. operations might manage to secure exemptions, the same cannot be said for smaller suppliers and mid-tier manufacturers. Companies based in Southeast Asia, for example, often lack the financial capacity to build or expand facilities in the United States within a short window of time. As a result, they are at risk of being edged out of the U.S. market unless they find ways to comply quickly.
Even the so-called exemptions themselves are no guarantee. Analysts suggest they are likely to come with strings attached, such as stricter regulatory oversight, pressure to transfer intellectual property, or expectations of long-term capital investment in American soil. In essence, firms might trade one form of risk for another.
What initially appeared to be a protective move for the American semiconductor industry may end up introducing more volatility. The exemptions give the illusion of stability, but beneath the surface, the landscape is shifting in unpredictable ways. For many in the chip sector, this policy is less of a lifeline and more of a ticking clock.