is the us chips act losing ground? tariffs gain traction with manufacturers

2025-08-12 general

Washington, Tuesday, 12 August 2025.
The US CHIPS Act, designed to revitalize domestic semiconductor manufacturing, is facing unexpected resistance. Tariffs are now a favored incentive. Big industry players, including Apple’s manufacturing partners, TSMC, and Samsung, have already made substantial investments. However, tariffs may be a more appealing and direct method to encourage domestic production. Apple’s partners have committed over $100 billion. This shift could significantly impact the CHIPS Act’s long-term success and relevance in the face of evolving economic strategies.

Chips act faces challenges

The CHIPS and Science Act, with a total cost of $52.7 billion, aimed to restore U.S. silicon sovereignty [1]. However, three years after its rollout, the CHIPS Act is being described as a repository for grand intentions but slow execution [1]. Intel, for example, was awarded nearly $8 billion but has received only $2.2 billion, while TSMC has drawn down about $1.5 billion [1]. The slow disbursement of funds and bureaucratic delays are prompting manufacturers to consider tariffs as a more immediate and effective incentive [1].

Tariffs as a better alternative

Kristian Castellano, Director of Marketing at The Information Network, stated that investments from companies like TSMC, Samsung, and Intel are rational responses to new cost structures imposed by tariffs rather than government handouts [1]. Tariffs on semiconductors and advanced electronics are incentivizing domestic reinvestment [1]. Donald Trump said on August 7, 2025, that he would impose approximately 100% tariffs on chips and semiconductors [2]. This has led manufacturers to re-evaluate their strategies, leaning towards tariffs for quicker returns [2].

Nvidia’s balancing act

Nvidia is navigating a tenuous relationship between the U.S. and China, striving to sell AI chips to both countries amidst tech competition [8]. The Biden administration’s export controls led Nvidia to create slower chips like the H20 for the Chinese market [8]. According to a report from the Financial Times, the U.S. Department of Commerce issued Nvidia a license to export H20 chips to China after Nvidia CEO Jensen Huang met with Trump in the White House [4]. On August 8, 2025, Nvidia’s stock price dropped by 3% following the announcement of new restrictions on the export of advanced AI chips to China [2].

Geopolitical tensions and trust

China’s Cyberspace Administration summoned Nvidia on August 5, 2025, regarding concerns that the H20 chip might contain a backdoor [8][6]. Nvidia firmly denies these allegations, stating its chips do not have kill switches or backdoors [8]. However, the U.S. has been implementing a ‘small yard, high fence’ strategy to limit China’s technological advancements [6]. China’s countermeasures include strengthening reviews through laws such as the ‘Cyber Security Law’ and the ‘Data Security Law,’ requiring foreign companies to prove their products have no safety hazards [4].

Implications for investors

The shift towards tariffs and increasing geopolitical tensions introduce uncertainty for investors in the semiconductor industry. Companies heavily reliant on the CHIPS Act may face slower growth due to delayed funding [1]. Simultaneously, companies like Nvidia, caught between U.S. and Chinese interests, face potential stock volatility due to regulatory changes and trust concerns [8]. Investors should closely monitor policy decisions, tariff adjustments, and company responses to navigate this evolving landscape [7].

Bronnen

CHIPS Act Semiconductors