Semiconductor Sector on Edge Over Tariffs: US President Trump Threatens 100% Tariffs on Chip Imports.

US President Donald Trump threatens a 100% tariff on "chips and semiconductors" imports, but exemptions will apply to companies building or have committed to build in the US. This move may impact foreign direct investment in the semiconductor sector and cause companies to re-plan their expansion strategies. Local players like QES Group Bhd may need to re-strategize and consider localizing their manufacturing.

US President Donald Trump has declared plans to impose a 100% tariff on semiconductor imports, a move that could significantly impact the global electronics supply chain. The announcement, made from the Oval Office with Apple Chief Executive Officer Tim Cook in attendance, promises exemptions for companies that commit to or are already manufacturing in the United States. This policy shift aims to boost domestic manufacturing and reduce reliance on foreign production, particularly from China.

Trump's declaration has sparked a scramble among trading partners and companies worldwide. The US president emphasized that companies like Apple, which have pledged substantial investments in domestic manufacturing, will be exempt from the tariffs. Apple, for instance, has committed to investing an additional $100 billion in the US, which includes plans to establish new manufacturing facilities and increase production of components within the country. This move comes as part of a broader trend where companies are increasingly shifting their manufacturing strategies to align with Trump's "America First" policies.

The potential impact on foreign direct investment in the semiconductor sector is substantial. Companies such as Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics Co. have pledged significant investments in the US to secure exemptions from the tariffs. These commitments highlight the strategic importance of the US market for semiconductor production and the willingness of major players to adapt their supply chains to avoid tariffs.

Local players in the semiconductor industry, such as QES Group Bhd, may need to re-strategize their manufacturing plans in response to Trump's tariff announcement. While the 100% tariff on imports is a significant challenge, the exemptions for companies committed to domestic manufacturing offer a potential pathway for local players to secure their position in the market. This could involve localizing production facilities, investing in advanced manufacturing technologies, or forming strategic partnerships with US-based companies.

The market reaction to Trump's announcement has been mixed. While US futures rose following the announcement, Asian tech stocks showed a mixed performance. The exemptions for companies like Apple and TSMC have calmed market fears, but the broader implications of the tariffs on the global electronics supply chain remain uncertain. The US administration has indicated that separate levies on all products containing semiconductor chips could be unveiled as early as next week, which could further disrupt the supply chain.

In summary, Trump's 100% tariff on semiconductor imports, with exemptions for US-based manufacturers, is a significant development that could reshape the global electronics supply chain. Local players in the semiconductor industry will need to adapt their strategies to navigate this new landscape and secure their position in the market.

References:
[1] https://finance.yahoo.com/news/trump-eyes-100-chips-tariff-030943996.html
[2] https://www.ainvest.com/news/veeco-instruments-outperformance-revenue-resilience-semiconductor-sector-gem-industry-headwinds-2508/