Trump admin targets 1:1 ratio of domestic to imported chips - report

The Trump administration is proposing a policy requiring semiconductor companies to match U.S. chip production to the number of chips imported, aiming for a 1:1 domestic-to-import ratio, with potential tariffs for non-compliance.

Achieving this balance is challenging due to complex supply chains and the gradual increase in U.S. manufacturing capabilities, affecting companies reliant on imported semiconductors.

Major firms like Taiwan Semiconductor Manufacturing and Micron Technology are investing in U.S. manufacturing plants, while companies like Apple and Dell Technologies may face difficulties due to their dependence on global semiconductor sourcing.

A grace period may be introduced to help companies adapt, and the government is conducting a trade inquiry to explore the national security implications of semiconductor imports, potentially leading to new tariffs.

Recommendation Rating: Semiconductor Production Policy Insights

The Trump administration is developing a new policy that would require semiconductor companies to produce an equivalent number of chips in the United States as their clients import from international manufacturers, targeting a domestic-to-imported chips ratio of 1:1, as reported by the Wall Street Journal.

Companies that fail to maintain this ratio over time will incur tariffs on the deficiency, according to sources familiar with the matter. However, achieving a balance between domestic production and import levels poses significant challenges. The complexity of existing supply networks and the gradual increase of U.S. manufacturing capabilities contribute to these difficulties.

Under the proposed framework, if a company pledges to manufacture one million chips in the U.S., its clients can continue to import that same quantity without encountering tariffs until the production facility becomes operational.

Key industry leaders, including Taiwan Semiconductor Manufacturing (NYSE:TSM), Micron Technology (MU), GlobalFoundries (GFS), and Samsung Electronics (OTCPK:SSNLF), have already begun investing in multibillion-dollar manufacturing plants in the U.S. However, this regulation may present obstacles for firms such as Apple (AAPL) and Dell Technologies (DELL), which rely on imported products containing globally sourced semiconductors.

There could be a grace period to help companies transition and increase manufacturing capacity within the United States, although the specifics of the policy and its enforcement mechanisms are still being debated.

Additionally, the government is currently conducting a trade inquiry to assess the impact of semiconductor imports on national security, with new tariffs expected to follow once the investigation concludes.

"The United States must not rely solely on foreign imports to fulfill our semiconductor requirements, which are essential for both national and economic security. However, until an official announcement is made by the administration, reports concerning our policy development should be treated as speculative," stated White House spokesperson Kush Desai.

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