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The tariffs Donald Trump proposed while campaigning could help create US semiconductor jobs.
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Tariffs could also help US chipmakers compete with companies abroad that sell chips at lower prices.
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To be sure, the impacts of a tariff policy on chips could be mixed.
If president-elect Donald Trump follows through on his campaign promise to impose tariffs, the domestic semiconductor industry could see job gains.
Industry experts told Business Insider that tariffs on foreign-made chips could help level the playing field for US chipmakers, which are facing fierce competition from their counterparts abroad. The tariffs could also encourage US businesses to source more chips domestically and help persuade chipmaking giants, like the Taiwan-based TSMC, to keep building factories in the US. These developments could aid job growth in the US semiconductor industry, though experts disagreed on how much.
Trump’s proposed tariff policies include a 60% tariff on goods coming from China and up to a 20% tariff on all imports, including chips. US companies source many of the chips needed to power items like iPhones and washing machines from abroad: The US share of overall chip production fell from 37% of the world’s supply in 1990 to roughly 10% today.
In an interview with podcaster Joe Rogan in October, Trump criticized the Biden administration’s CHIPS Act legislation, which included $52.7 billion in tax breaks and subsidies for companies in the semiconductor industry. He said that the federal government should have implemented tariffs instead to motivate global chipmakers to build more factories in the US, which would then create jobs.
“You didn’t have to put up $0.10,” Trump said. “You could have done it with tariffs. You tariff it so high that they will come and build their chip companies for nothing.”
To be sure, the impacts of a tariff policy on chips could be mixed. Jeff Koch, an analyst at the semiconductor research and consulting firm SemiAnalysis, told BI that tariffs could lead to higher prices for goods containing chips, such as cars, electronics, and appliances. He added that US chipmakers could likely benefit from these tariffs because it could help them compete with companies abroad that sell chips at lower prices.
The Trump campaign did not respond to a request for comment.
Tariffs on chips could boost construction and manufacturing jobs
Patrick Moorhead, founder, CEO, and chief analyst at the research and advisory firm Moor Insights and Strategy, told BI that tariffs could increase the number of US chip manufacturing jobs. He added that he thinks the policy could incentivize chipmakers like TSMC and Samsung, which is based in South Korea, to boost manufacturing in the US.
“The cost of manufacturing in the US for Samsung and TSMC would be lower than a 30% to 40% tariff on wafers and packaging,” he said, referring to key components of the chipmaking process.
Jeff Ferry, chief economist at the Coalition for a Prosperous America, a nonprofit that advocates for increasing domestic manufacturing, estimated that tariffs could create roughly 100,000 jobs at US chip manufacturers and their suppliers.
He said this estimate was partly based on a report published in 2021 by the Semiconductor Industry Association — a trade association and lobbying group — that said a $50 billion investment would help create an estimated 10 additional chip factories in the US. That could add about 42,000 direct jobs at the companies building these factories and 101,500 indirect jobs at chipmakers’ suppliers, per the report.
Ferry said he thought chip tariffs could lead to the creation of roughly 10 additional factories, which led him to come to the 100,000 jobs estimate. In August, the White House said that investments supported by CHIPS Act funding would help create 115,000 construction and manufacturing jobs.
“Tariffs on chips, particularly legacy chips like those used in autos, could successfully shift production back to the US,” Ferry said.
Samsung did not respond to a request for comment. Intel and TSMC did not respond to a question about what impact a Trump administration tariff policy would have on each company’s job creation plans in the US.
An Intel spokesperson pointed to a press release from March, which said the company’s $100 billion investment in the US over the next five years is expected to create more than 10,000 jobs at Intel and nearly 20,000 construction jobs. TSMC pointed to a press release from April, that said TSMC’s investments in three Arizona chip factories are expected to create roughly 6,000 company jobs, more than 20,000 construction jobs, and tens of thousands of indirect supplier and consumer jobs.
Stephen Ezell, the vice president for global innovation policy at the Information Technology and Innovation Foundation, said that the effectiveness of a tariff on chips could be limited, in part because many chips aren’t imported directly into the US: He said they often come embedded into finished products like smartphones or computers.
For example, he said that in most cases, chips that TSMC manufactures in Taiwan for Apple are sent to China or India to be incorporated into a product like an iPhone. Therefore, the chip wouldn’t be subject to a US tariff but the iPhone would.
When deciding whether to build a chip factory in the US, Ezell said several factors — including wage rates, the labor talent pool, and tax policy — would be bigger considerations for companies than the country’s tariff policy. But if tariffs proved to be the deciding factor in a company’s decision to invest in the US, then Ezell said the policy could arguably be credited with boosting employment in the semiconductor industry.
“If a company did decide not to launch a factory elsewhere and instead launch it in the United States, then yes, this dynamic could lead companies to hire more,” he said.
Do you work in the US semiconductor industry? Reach out to this reporter at jzinkula@businessinsider.com
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