“In the near future, we will be placing tariffs on foreign production of computer chips, semiconductors and pharmaceuticals to return production of these goods to the United States. They left us and went to Taiwan, which is about 90% of the chip business. And we want them to come back, and we don’t want to give them billions of dollars like this ridiculous program [former President Joe] Biden has.”
That was the message on Monday from President Donald Trump to the House Republican Issues Conference hosted at the Trump National Doral Golf Club in Miami. While he didn’t land on a specific timeline or tariff amount, the president threw out 25%, 50% and 100% as possibilities. And while the goal may be to reshore domestic manufacturing capacity, another outcome of those tariffs could be significant price hikes across a broad swath of electronics.
With regard to his comment about the “ridiculous” Biden-era program to fund domestic production, Trump is presumably referencing the CHIPS Act which was developed with bi-partisan support during his first term, and signed into law by him in January 2021. One of the goals of the CHIPS Act, administered by the U.S. Department of Commerce, is to incentivize constructio of new and expansion of existing semiconductor fabrication facilities in the United States to secure critical infrastructure supply chains and diversify leading-edge production outside of Taiwan.
Major funding recipients include Global Foundries, Intel, Micron, Texas Instruments, Samsung and TSMC. More from Trump on the CHIPS Act funding recipients: “They already have billions. They have nothing but money. They needed an incentive and it will be they will not want to pay a tax. They will build a factory with their own money. They will come in because it’s good for them. They don’t even know what they are going to do with it. They didn’t need money. They probably will use the money to build. It’s ridiculous. If you want to build…you have to build in America. That will happen at record levels. We will have more plants built in the next short period of time than ever before because the, the incentive will be there.”
As for building out semiconductor fabrication in a “short period of time”…that’s not possible. It takes years to build and operationalize semiconductor fabrication plants, not to mention acquiring or otherwise train the skilled workforce needed to run the plants.
Today, Taiwan’s Premiere Cho Jung-Tai said relevant governmental entitled are carefully watching the “developments of the past few days,” according to CNN. “In a day or two we will urgently look at whether we need to make more cooperative plans and future assistance programs for the industrial sector. I would like to reassure our compatriots that Taiwan’s position in the world’s industrial chain is not to be ignored, and that we will continue to maintain such an advantage.”
TSMC announced in 2020 it would invest $12 billion in an Arizona fab. The company since expanded that investment to $65 billion. TSMC also received $6.6 billion from the CHIPS Act specifically to build 2-nanometer process nodes beginning in 2028.
