Trump tariffs can increase cost of manufacturing chips in the USA

The Trump administration in the United States government has been imposing a series of tariffs in different import segments in order to boost the internal semiconductor industry. More recent impositions, however, can be embarrassed by manufacturers that the country has invested to attract and result in higher costs to manufacture US chips.

The current government of the US country has decided to tax the importation of WAFERS manufacturing equipment (WFE) in order to promote the use of these equipment produced nationally. Thus, companies manufacturing US chips had to pay 20% to 32% of imported WFE taxes, as early as April 9.

The first problem appears when we take into account that there is machinery that is simply not done in the US. Applied Materials, Kla and Lam Research are based on the country and are among the largest equipment suppliers in the world, but they do not have WFE to make chips in EUV and DUV, for example.

ASML follows without competitors in this area and some of its machines will reach 32% of tariffs, as they are mounted in Taiwan. To make matters worse, these are precisely among the most expensive equipment a manufacturer can currently buy. The Twinscan Exe: 5000 High-NAV series, for example, costs around $ 456 million.

Changing the machinery to escape the tariffs can be complicated

High prices for machinery that cannot be purchased in the US is just the first problem. The second may appear when effectively exchanging equipment in cases where replacement is possible.

As explained by Tom’s hardware, there is a whole production flow that can already be based on imported WFE, which can complicate and greatly delay a company’s manufacturing capacity in case of exchange. Not to mention many cases where some tools were customized specifically by order for a particular process, which would make your exchange even slower and expensive for the company.

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That is, in the end it is very likely that tariffs result in high production costs that, in turn, will culminate in price increase in end products for consumers.