On the afternoon of November 6, Beijing time, the results of the 2024 U.S. presidential election were announced, with Trump securing 270+ electoral votes, set to become the 47th president of the United States.
What impact will Trump’s election have on the global semiconductor industry and China’s semiconductor industry? How should Chinese companies respond?
Recently, in an interview, Trump stated that the “CHIPS Act” is a bad plan, and Republican Speaker of the U.S. House of Representatives Johnson also expressed the need for revisions and optimizations of the act. The full name of the “CHIPS Act” is the “Chips and Science Act,” a law signed by the U.S. government on August 9, 2022, aiming to promote chip manufacturing to return to the U.S. through substantial industry subsidies and tax incentives, and to enhance investment in cutting-edge technology research and development.
“The act has two main goals: firstly, to localize the semiconductor industry through subsidies and tax incentives, encouraging the establishment of factories in the U.S., hiring local employees, and applying U.S. technology in the supply chain; secondly, to maintain the U.S.’s competitive edge in global technology. Fifty years ago, the U.S. was the world’s major semiconductor production base, but in recent decades, some East Asian countries and regions have overtaken it, capturing the largest share of semiconductor production and profits. The U.S. wants to maintain its leadership in the tech industry, which requires bringing semiconductor manufacturing back to the U.S.,” said Wang Yang, a senior analyst at Counterpoint, to Yicai Global.
Industry insiders believe that as a law passed by the Democratic Party, the “CHIPS Act” may face obstacles in continued implementation under Trump due to conflicts with his and the Republican Party’s political philosophy.
In recent public remarks, Trump criticized the CHIPS Act, stating, “This act is terrible! Tariffs, not spending a dime, should be used to force overseas companies to build factories in the U.S.” He explained that the CHIPS Act essentially hands money to wealthy foreign firms and that setting tariff barriers would prompt companies to establish U.S. facilities based on cost-benefit considerations without spending taxpayer money.
Moreover, Trump mentioned in prior interviews that, if elected, he would increase tariffs on U.S. imports of chips from Taiwan.
“From Trump’s recent comments, it appears that once in office, he will adopt measures such as domestic tax cuts to reduce operating costs for companies and increase tariffs on foreign companies to raise their operational costs,” said Wang Yang. “Trump tends to support the development of local semiconductor firms and does not want foreign companies like TSMC, Samsung, and SK Hynix to receive excessive subsidies. He may also impose higher tariffs on these companies’ imports to the U.S.”
Major U.S. chip companies, represented by Nvidia, heavily depend on wafer manufacturers, chip suppliers, and equipment makers from other parts of the world, including TSMC, Samsung Electronics, SK Hynix, Tokyo Electron, and others. Industry analysts believe that if this tariff policy is implemented, it will increase the costs across the entire technology supply chain.
Although Trump’s policies will impact this highly specialized semiconductor supply chain, potentially altering its structure and profit distribution once again, he has not recently expressed significant views regarding China’s semiconductor industry.
Wang Yang believes that Trump, once in office, will likely draw on the measures of the previous administration to continue restricting the export of technology from the U.S. and its trade partners—including Nvidia, ASML, Samsung Electronics, SK Hynix—to China. “I think there may be new companies added to the entity list in the future, and export control measures will become stricter.”
Furthermore, Trump may take a hardline stance against key Chinese tech companies.
“Compared to Biden, Trump is more of a businessman and places greater emphasis on market value,” said Zhang Yi, CEO and chief analyst at iiMedia Research. “Suppression of Chinese semiconductor companies might, in turn, accelerate the progress of semiconductor localization in China. Once domestic alternatives are achieved, U.S. sanctions in this area would become meaningless. Additionally, to garner support from Silicon Valley tech firms, Trump might consider negotiations with Chinese companies involving pricing and additional terms, allowing access to advanced foreign technology.”
Looking at specific restrictions, high-bandwidth memory (HBM) chips, which play an increasingly crucial role in AI chips, may face tighter supply controls to China. Currently, only Samsung Electronics, SK Hynix, and Micron supply cutting-edge HBM chips. “The U.S. may further limit the supply of HBM chips from Samsung Electronics and SK Hynix to China,” an industry source noted.
However, some industry experts suggest there is no need for excessive pessimism regarding the impact of U.S. restrictions on domestic R&D and production of advanced chips.
“For instance, in the case of domestic GPUs, China has stockpiled a relatively large amount of equipment and materials in the short term. Except for a few companies, most GPU firms have not been barred from using TSMC’s advanced manufacturing processes. In the short term, GPU production will not be affected; in the medium to long term, domestic equivalent technologies, such as multi-patterning lithography and etching, are already available and improving in yield, enabling the expansion of domestic GPU production,” added the source, suggesting that the situation is manageable, with various workaround solutions available in the supply chain.
Source: YICAI
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