Trump’s 100% Tariff on Semiconductors Leaves Industry Uncertainty, Potential Exemptions for Major Players Unclear

In a break from speculation, President Donald Trump has unveiled further details regarding his proposed tariffs on semiconductors and chips, but the latest announcement may spark more queries than solutions.

On Wednesday, Trump disclosed plans to impose a 100% tariff on imported semiconductors and chips, with exceptions for companies that establish manufacturing operations within the United States.

With the global semiconductor industry estimated at over $600 billion and central to the modern digital economy, any potential tariffs could carry significant weight.

However, experts caution that the President has yet to release crucial details about the policy, which will ultimately determine its full impact and scope.

“At this juncture, it’s premature to accurately assess the repercussions of the tariffs on the semiconductor sector,” Ray Wang, research director for semiconductors, supply chain, and emerging technology at The Futurum Group, told CNBC. He added that the final regulations are still being drafted, and the technical specifics are yet to be clarified.

One of the key questions for chip manufacturers and investors will revolve around the extent of U.S. manufacturing a company must undertake to qualify for tariff exemptions.

The U.S. has been actively pursuing onshoring its semiconductor supply chain for several years now. Since 2020, major global players such as TSMC and Samsung Electronics have pledged hundreds of billions of dollars towards building manufacturing facilities in the U.S.

Speaking to CNBC’s “Squawk Box Asia” on Thursday, James Sullivan, managing director and head of Asia Pacific Equity Research at J.P. Morgan, suggested that this could mean most significant chip manufacturers might receive exemptions. If so, the policy could serve to further consolidate market share among leading players in the sector.

Indeed, shares of major Asian chip companies like TSMC, which has substantial investments in the U.S., rose in Thursday morning trading following Trump’s announcement. Earlier this year, TSMC announced plans to expand its investments in the U.S. to $165 billion.

Shares of South Korea’s Samsung and SK Hynix – both of which have committed investments in the U.S. – also saw gains after a Korean trade envoy reportedly indicated that the duo would be exempt from the 100% tariffs.

Beyond the question of exemptions, many other aspects of the potential tariffs remain unclear.

Speaking on CNBC’s “Squawk Box Asia,” Stacy Rasgon, senior U.S. semiconductor analyst at Bernstein, noted that most semiconductors entering the U.S. are embedded within consumer goods such as smartphones, PCs, and cars.

While tariffs on these imports may be manageable, broader tariffs could present challenges. “What we don’t know with [Trump’s] comments on tariffs, is it just raw semiconductors? Are there going to be tariffs on end devices? Are you looking at tariffs on components within end devices?” Rasgon asked.

The uncertainty surrounding chip tariffs has been amplified since the U.S. Department of Commerce initiated a national security investigation into semiconductor technology imports in April – just as the sector was exempted from Trump’s “reciprocal” tariffs.

Vague language from the Trump administration, though not invoked in the President’s latest proclamations, could theoretically be used to levy broad tariffs across a vast segment of the electronics supply chain. It remains unclear to what extent semiconductor materials and equipment used to manufacture chips would fall under the tariffs.

Potential tariff strategies could also be complicated by the intricate and interdependent nature of the semiconductor supply chain. For example, American chip designer Qualcomm sends its designs to TSMC for manufacturing in Taiwan before being imported into the U.S. “Does that mean those [chip imports] would not be tariffed, because they’re made at TSMC, and TSMC is building in the U.S.?… I don’t know,” Rasgon said.

A significant buyer of semiconductors in the U.S. are cloud service providers like Amazon Web Services and Google, which play a crucial role in powering Washington’s AI initiatives. According to a recent report from ITIF, semiconductors contribute $7 trillion annually in global economic activity by underpinning various downstream applications, including AI and “big data.”

In a potential sign of American companies seeking to move their chip supply chains into the U.S., Apple CEO Tim Cook announced, alongside Trump at the White House Wednesday, that the company will be sourcing chips from Samsung’s production plant in Texas. The tech giant also revealed an additional $100 billion in U.S. investments, raising its total investment commitments in the country to $600 billion over the next four years.