Trump’s Election Victory Raises Uncertainties for the Semiconductor Industry

With Donald Trump’s recent announcement of victory in the 2024 U.S. presidential election, the semiconductor industry, both in the U.S. and globally, faces significant potential upheaval. Trump is expected to continue his tough stance on tariffs and may escalate trade tensions, which could impact the development of the semiconductor sector worldwide.

The CHIPS Act, a hallmark achievement of President Joe Biden, has positively impacted investment in advanced semiconductor manufacturing in the United States, providing $39 billion in subsidies and $75 billion in loans to bolster the sector. Currently, the Biden administration is racing to secure key agreements under the CHIPS Act with companies like Intel (INTC.US) and Samsung Electronics. This push aims to lock in industrial policy gains before Trump’s anticipated changes to policy priorities. The CHIPS Act is intended to revitalize the domestic U.S. chip industry. The Commerce Department has allocated more than 90% of the $39 billion in funding, though only one binding agreement has been reached. Over the next two months, negotiations with over 20 companies are critical. Some companies are close to finalizing agreements, while others, including Intel, Samsung, and Micron Technology, are still working through the details.

According to a report from the Semiconductor Industry Association (SIA), by 2032, the U.S. share of global semiconductor manufacturing capacity is projected to increase from the current 10% to 14% with the CHIPS Act in place. Without it, that share could drop to 8%.

However, Trump has recently called the CHIPS Act a “disaster,” stating that it wastes billions on attracting foreign companies to set up chip plants in the U.S. He instead advocates for using tariffs to draw investments, arguing this approach attracts top companies without the need for subsidies.

House Speaker Mike Johnson was recently recorded suggesting that if Republicans take full control of Congress and Trump wins the presidency, they “may very well” attempt to roll back the CHIPS Act. Johnson quickly retracted the statement, blaming it on a misunderstanding of the question, and emphasized that while Republicans support chip manufacturing, they do not back the Green New Deal. Johnson also suggested the CHIPS Act may need “streamlining and improvement.” This incident, however, casts some doubt on the longevity of the current policy.

Beyond his stance on the CHIPS Act, Trump’s recent comments regarding Taiwan have sparked controversy. He claimed that “Taiwan has taken away America’s chip business,” implying that Taiwan should pay for U.S. protection, and proposed tariffs on Taiwanese-made chips if he returns to the White House. This is despite the fact that over 90% of the world’s advanced chips are manufactured by Taiwan’s TSMC. Trump commented, “We’ve invested billions of dollars to bring in wealthy companies to borrow and build chip plants here.”

Trump’s views, however, differ slightly from those of his running mate, JD Vance, who sees Taiwan’s semiconductor industry as crucial to U.S. national interests. From an international relations perspective, TSMC’s investment in U.S. facilities aligns with American strategic goals. Moreover, TSMC’s willingness to invest in the U.S. means higher costs, such as increased labor expenses, which some interpret as a “protection fee.”