how trump's return could reshape the semiconductor industry
Taipei, Tuesday, 31 December 2024.
Chris Miller, the author of ‘Chip War’, delves into the implications of a potential Trump presidency on the semiconductor sector. He highlights the continuation of bipartisan support for domestic manufacturing subsidies and restrictions on technology transfers to China. The focus could shift towards increasing tariffs to lessen dependence on Chinese manufacturing and boost U.S. production. Miller suggests that Trump’s administration might impose tariffs directly on Chinese goods, compelling companies to diversify investments. The CHIPS Act’s tax credits, due to expire in 2026, might see legislative action for extension or permanence. Meanwhile, TSMC, a pivotal player in the industry, faces compliance challenges, especially concerning chip exports to Huawei. As the global tech landscape shifts, Taiwan’s strategic positioning remains crucial. Miller advises aligning with U.S. objectives to navigate the evolving electronics supply chain, emphasizing the need for robust compliance and strategic international partnerships.
Market impact of potential policy shifts
The semiconductor industry faces significant policy changes under a potential Trump presidency, with experts predicting a stronger emphasis on tariffs and trade restrictions. Chris Miller, author of ‘Chip War’, indicates that Trump’s administration would favor direct tariffs on China to create financial incentives for companies to invest elsewhere [1]. This approach marks a shift from the current subsidy-focused strategy, potentially affecting investment decisions for major chip manufacturers [1][2].
TSMC’s strategic challenges
TSMC, producing 92% of the world’s most advanced microchips [4], faces mounting pressure amid geopolitical tensions. The nomination of Elbridge Colby as undersecretary of defense policy [4] signals a hawkish stance on Taiwan’s semiconductor assets. Colby’s previous statements about potentially destroying TSMC facilities in case of Chinese aggression [4] have raised concerns about the company’s risk profile.
Japanese market reaction
The potential policy shift is already affecting Asian markets, with 39% of leaders from 145 Japanese companies indicating Trump’s policies would negatively impact their operations [6]. Moreover, 40% of Japanese executives are reconsidering their China strategy due to Trump’s tariff threats [6], suggesting a broader realignment of Asian semiconductor supply chains.
Regulatory landscape evolution
The semiconductor industry faces a complex regulatory environment with the CHIPS Act tax credits set to expire in 2026 [1]. Miller suggests Congress will likely extend or make these credits permanent [1]. The appointment of Jacob Helberg as State Department undersecretary for economic growth [2] indicates a continued focus on technological dominance and export controls.