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Investing.com-- The Donald Trump administration is weighing options to substantially lower the U.S.’ reliance on semiconductor imports by boosting local manufacturing, the Wall Street Journal reported on Friday.
The White House is considering a policy that will have chipmakers produce the same number of chips in the U.S. as their customers import from abroad, the WSJ reported, citing people familiar with the matter.
Companies not producing in line with the 1:1 ratio will be subject to a tariff, the WSJ reported.
The plan is largely in line with Trump’s attempts to promote more domestic production in the U.S., with the president having last month slapped a 100% tariffs on all chip imports while exempting companies with U.S. manufacturing from the tariffs.
Commerce Secretary Howard Lutnick has discussed the idea with chip executives, the WSJ reported.
But it remained unclear just how Trump could achieve this goal, given the logistics and unit cost mechanics of overseas chip production. Foreign-made chips stand to be much cheaper than those produced locally due to lower input and labor costs, while setting up the infrastructure required to produce chips is also a time and capital-intensive process.
TSMC (NYSE:TSM)– the world’s biggest contract chipmaker– has committed nearly $200 billion towards producing more chips in the U.S., with the company’s Arizona plant beginning production in late-2024. But the plant still produces a fraction of TSMC’s overall output.
Trump has attempted to support American chipmakers, with his administration taking a 10% stake in beleaguered chipmaker Intel Corporation (NASDAQ:INTC) earlier this year.