Semiconductors: The Good, the Bad, and the Uncertain

Welcome to the next installment in our of four-part blog series, where we take a look at the incoming administration’s vision, and how it may affect the segments we work with at Kiterocket. In this series, we will also provide proactive marketing strategies. If you are in the semiconductor ecosystem, this next blog is for you. Read on and stay tuned for more.

Let’s face it. The future of technology in the U.S. (and abroad) leans heavily on the use of semiconductors—those tiny yet powerful components that ensure performance for advanced applications spanning healthcare, computing, transportation and more. However, with most semiconductors being manufactured in Asia, many are concerned about President-elect Trump’s call for international tariff hikes, which could lead to disruptions in the supply chain, higher overall pricing, and the inability of businesses to procure and/or sell necessary quantities. Plus, Trump’s stance on immigration could pose a challenge to filling out a much-needed workforce.

That said, this news may not be all doom and gloom, as high tariffs on imports could make room for a competitive domestic market. At the same time, with billions of dollars already at work, we could continue to reap the economic benefits of the CHIPS and Science Act.

Either way, ensuring a healthy future for semiconductors requires ongoing awareness, marketing and education that highlights the importance of this technology in our society.

The Tariff Effect: A Push for More Domestic Production

The t-word is not something most of us like to hear. And according to TechInsights, Trump has indicated tariffs of “up to 50% on semiconductor imports.” If implemented, the response could be incredibly high prices for consumer and commercial products, as well as overall inflation increases, making life for manufacturers/providers across markets very difficult. It could also lead to retaliatory moves by countries like China, which could place added export restrictions on critical minerals, for example.

It is no surprise, therefore, that further moves are being made to bolster manufacturing within the U.S. borders, in an effort to circumvent potential tariffs/supply chain disruptions.

In fact, according to digwatch, Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest semiconductor foundry, is negotiating to produce NVIDIA Blackwell artificial intelligence (AI) chips at its new plant in Arizona. But NVIDIA isn’t the only one. Companies like Intel and Samsung are also pushing for more U.S. production. And this push is likely to continue, which could mean a boost in U.S. job growth, as well as competitive pricing, if more domestic manufacturers open their doors. A report from Yahoo News indicates that “tariffs could create roughly 100,000 jobs at U.S. chip manufacturers and their suppliers.”

In the meantime, whether or not these tariffs will be implemented to the fullest is yet to be seen. According to a piece in Counterpoint, “It is highly unlikely broad tariffs… will be passed by the numbers [Trump] needs from his own Republican party.” But what that means for specific tariffs on semiconductors is up for grabs, especially as the highly influential Elon Musk is likely to “highlight to Trump the importance of NVIDIA to AI’s progress and subsequently TSMC’s role in supporting the fledging AI industry.” And that could end up keeping certain tariffs at bay.

Can the CHIPS Act Help Save the Day?

Here’s the not-so-good news. The CHIPS Act, which has played a significant role in jumpstarting semiconductor manufacturing in the U.S., is in potential danger of major claw-backs or even a repeal. According to Business Insider, “Trump has criticized the CHIPS Act and suggested he’d prefer tariffs to incentivize semiconductor manufacturing on U.S. soil.” It is a sentiment somewhat echoed by House Speaker Johnson, who recently made inferences towards a “streamline” of the legislation.

On the other hand, with nearly $53 billion in investments through the CHIPS Act, there is already a fair amount of semiconductor manufacturing underway in the U.S., a step forward for our economy that may be hard to walk back. According to the Semiconductor Industry Association (SIA), “as of August 2024, companies in the semiconductor ecosystem had announced more than 90 new manufacturing projects in the U.S. since CHIPS was first introduced in Congress.” Not only that, but it has led to the creation of over 100,000 related jobs and counting.

That’s potentially good news for the future of the industry, as these manufacturing sites and jobs have had a tremendous, positive impact on both red AND blue states, making the idea of a CHIPS Act repeal more complicated for the administration. According to Tech Target: “Proposing dramatic changes to the 2022 CHIPS and Science Act would likely get pushback from Republican lawmakers whose states would benefit from the law.”

And just to refresh our memories, the legislation did initially pass with substantial Republican support.

But the current Biden administration isn’t taking chances. Spectrum News 1 reports that “Before Trump takes office, the Biden administration is rushing to disburse CHIPS funds, last month finalizing a $7.86 billion grant for Intel.”

Semiconductor Workforce Challenges

We are all aware of the incoming administration’s stance on border and immigration issues. To put a fine point on it, the American Civil Liberties Union (ACLU) reports that “Donald Trump promises to decimate American communities by targeting immigrants who are already contributing members of society and blocking new immigrants from coming lawfully to the United States.” While it is hard to know just how far new policies will go, this sentiment certainly should give the semiconductor industry pause.

In a recent article by Marketplace, John Cooney, VP of global advocacy and public policy at SEMI, reiterated the semiconductor industry’s strong reliance on the H-1B visa program for filling manufacturing and engineering positions. Furthermore, an article in Newsweek reports a “push for increased manufacturing of semiconductors in the country… but that less than 30 percent of full-time electrical engineering graduate students are U.S. citizens, so foreign students are needed, too.” And this is all amid an “H-1B visa-to-green card backlog [which] hit an all-time high of 1.8 million people in 2023,” according to Investopedia.

Bottom line? The U.S. semiconductor industry needs a constant stream of workers, and any moves by the incoming administration to further block or slow the H-1B visa program could lead to a major disruption. And it is important to note that, during the first Trump administration, the U.S. Citizenship and Immigration Services (USCIS) “denied a larger percentage of H-1B petitions than in the preceding four years.”

Leveraging Marketing to Generate Industry Support

So… where do we go from here?

The new Trump administration brings a mix of opportunities and challenges for the semiconductor industry, with potential impacts on trade policies, manufacturing incentives, and technology regulations. In uncertain times like these, marketing becomes a vital tool to maintain visibility and strengthen industry positioning. Now is the time to focus on publishing news that highlights innovations, achievements, and contributions coming from the semiconductor space, particularly those that benefit our society as a whole – whether it be related to health, the economy, education or even everyday convenience.

This is not the time to scale back; instead, it’s an opportunity to showcase your company’s thought leadership in semiconductors and establish trust with customers and stakeholders. Strategic marketing efforts to consider include:

  • Sharing success stories
  • Publishing expert insights
  • Engaging in industry discussions
  • Holding educational events

By leveraging these techniques, marketers in the semiconductor field can better raise awareness of  their brand’s relevance and resilience, positioning their company for growth – regardless of external challenges.