“The tech industry is a global industry, and as we saw during Trump’s first term, if you place restrictions on any part of the value chain, you impact the entire value chain in one way or another. Between Trump’s threats and [Xi Jinping, China’s president] threats [referring to the restriction of rare earth materials], the tech industry could be in for a very rough ride, not to mention the US and global economies,” said Jim McGregor, principal analyst with Tirias Research.
The problem with tariffs is that in the end, the tariffed company passes the cost of them along and the customer pays ultimately them. Patrick Moorhead, president of Moor Insights & Strategies, said the tariffs would more than likely mean that AMD, Nvidia, Qualcomm, Apple, Broadcom and Marvell costs would increase.
“They would attempt to pass that onto their customers like AWS, Microsoft, Google, Dell, HPE, HP, Cisco, Apple, and Lenovo. This would likely lead to in a price increase of the end product,” he said.
Moorhead thinks there will be ”severe pushback” on the part of TSMC customers and adds that based on how Trump operated in his last term, that there will be a negotiation, and it will go away.
“Trump wants more leading-edge chips manufactured in the US. The goal is to add jobs and tax revenue and also limit risk of a possible Taiwan invasion by China. Diversified supply chains are smart and motivating TSMC to invest in more US manufacturing via tariffs could be effective. I do believe that Intel will see a lot of business from this as they are making the biggest US investments,” he said.
Bob O’Donnell, president and chief analyst with TECHnalysis, echoes this sentiment. “Because of this massive negative impact, I seriously doubt that the Trump administration would really enforce these. Instead, I hope we’ll see encouragements to build more chips in the US, but that’s a multi-year process,” he said.
