Imposes Tariffs on All Imported Microchips and Semiconductors by the U.S.
The United States has announced plans to impose 100% tariffs on all imported chips and semiconductors starting this month. This move, confirmed by President Trump on August 6th, could have significant implications for companies worldwide, particularly those in Japan, South Korea, and the Philippines.
However, it's important to note that some companies may be exempt from these tariffs. Chip firms such as Nvidia and Taiwan Semiconductor Manufacturing Company are among those that could potentially avoid the tariffs. The exemption is likely due to their investment commitments in the US.
One such investment comes from Air Liquide, a French multinational company, which plans to invest over $50m in a gas production plant for a semiconductor manufacturing business based in the southeastern US. This investment could be a sign of the industry's resilience and adaptability in the face of tariff challenges.
The global electronics gas market is forecasted to grow by 4.8% year-over-year in 2025, reaching $6.34bn, according to Techcet. Front end 'process materials' are expected to lead the recovery, with an estimated revenue growth of over 6% in 2025 and a 5% compound annual growth rate through 2029.
The tariffs could have a more pronounced impact on electronics manufacturing services providers that assemble the end device before it enters an import tariff country. Consumer electronics, PC segments, and automotive sectors are anticipated to have a slow start in the first half of 2025, with a stronger second half.
The soaring global demand for computer chips, with sales up nearly 20% in the year to June, underscores the importance of this industry. Semiconductors were the fourth largest industry globally by value creation last year, according to McKinsey & Co.
The tariff policies and US-China tensions are driving the localization and reshoring of materials supply. This trend could lead to more investments like Air Liquide's, as companies seek to establish production facilities within the US to avoid tariffs.
For a deeper understanding of the implications of these tariffs, Lita Shon-Roy, President/CEO and Founder of Techcet, spoke at gas world's Specialty Gas Summit 2025. You can listen to her insights here.
It's crucial for companies to carefully assess the value-add stage and the country of origin when considering the impact of tariffs. For instance, an end-device tariff would tax products after the value-add has been incorporated throughout the product life cycle.
India was slapped with an extra 25% levy this week, taking its overall tariff to 50%. This move could serve as a cautionary tale for other countries, highlighting the potential consequences of trade disputes.
In April, it was warned that semiconductors and pharmaceuticals were in the US's tariff sights. The current tariffs on chips and semiconductors underscore this warning, emphasizing the need for companies to stay informed and adapt to changing trade policies.
As the situation evolves, it's clear that the electronics industry will continue to be a significant player in the global economy. The tariffs could lead to a shift in production strategies, with more companies looking to invest in domestic manufacturing to avoid tariffs and maintain consistency in their inputs.
