Trump is still considering definitions on Taiwanese chips, despite the $ 100 billion deal

Second, definitions can only make foreign companies start producing chips in the United States if they become cheaper than doing it elsewhere. But the costs of US higher employment and the country’s lack of the advanced supply chain of conductors means that the transfer of manufacturing there will take years, if not contracts, and there is little guarantee that such US outposts will be profitable. In the face of American definitions, it may be more logical for Taiwanese companies such as TSMC to transfer production simply to a third country instead to avoid payment.

But the Trump administration can choose to expand definitions to all countries, making production in the United States a only applicable alternative. Instead, definitions can be applied to any final products containing Taiwanese chips.

The last idea will be a significant disruption to the semiconductor industry. One smartphone can have dozens of internal chips responsible for a range of different functions; The car can have thousands. The discovery of any of them has components of Taiwan, the extent of imposing taxes on these components, and the difficulty of finding alternative products that will put a heavy burden on the final product companies.

Semiconductor companies are likely to be not prepared for such a scenario, especially since their products have often succeeded in definitions in the past. “The industry has not dealt all over the world with the tariffs of chips like this before,” says the semiconductor industry that is based in Taiwan, which publishes public comments under the HSU Mei-Hu. “It is theoretically possible, but almost impossible in practice.”

Policy forcing companies like Apple to ask each of its suppliers about the cost of many types of chips that they use, only to determine the appropriate amount of definitions that must be announced. “After announcing it, how do you check customs? If you put a random value, how do you know customs?” HSU says.

The Biden Administration has previously discussed the use of a tariff for ingredients against Chinese chip makers to weaken the country’s semiconductor industry and protect US national security. Miller says that one of the main arguments against the idea is that it will be difficult to implement logistical.

Miller says that the tariff of ingredients is definitely under study in Washington again this time, but it will be difficult to impose on the imports of Taiwanese chips because it plays a wider and more important role than Chinese chips. “If you are concerned about the administrative complexity of the constituent definitions in China, you should be more concerned about the administrative complexity of Vis-Vis Taiwan,” he says.

The biggest losers

TSMC will lose less than a possible US tariff than other companies because of its unparalleled weight in this industry. TSMC is currently making nearly 90 percent of the most advanced chips around the world, and its production lines are currently working at full capacity. If Trump raises the tariffs and forces TSMC to increase their prices, the company may lose some requests to competitors, but experts say this is not a great concern.

But it is possible that TSMC customers quickly find alternatives. Although companies such as Samsung and Intel have achieved similar knowledge in the manufacture of somewhat advanced chips, they will be consumed for time, insignificant, and risky to move mature production operations from TSMC factories. So, instead of going to another chip maker, it is possible that American companies such as Apple and NVIDIA will continue to put the bill for TSMC products, and eventually transfer the high costs of their customers.