US Semiconductor Industry Faces New Tariff Challenges: What It Means for Consumers and Intel’s Future

The semiconductor industry is once again in the crosshairs of economic policy as the United States prepares to impose additional tariffs on chips imported from China. The Biden administration’s 50% tariff, set to take effect in 2025, could now be accompanied by an additional 25% tariff proposed by former President Trump. These tariffs are expected to reshape the landscape for chip manufacturers, consumers, and major industry players like Intel.

Tariffs and Their Impact on the Semiconductor Industry
Ohio State University Professor of Economic Development Emeritus Ned Hill warns that these tariffs will significantly increase the cost of integrated circuits entering the U.S. market.

“If there are additional tariffs that are imposed, it means that the cost of integrated circuits or chips imported into the United States will go up by at least the amount of the tariff,” Hill stated.

A tariff is essentially a tax on imported goods, and historically, this cost is often passed down to consumers. Hill estimates that anywhere between 80% to 100% of the tariff’s price burden could ultimately fall on consumers, making electronics and technology products more expensive across the board.

How Intel Stands to Benefit and the Risks Involved
With Intel’s massive semiconductor plant under construction in central Ohio, these tariffs could provide a competitive advantage by making offshore chips more expensive. This price shift may allow U.S.-based production to raise prices, boosting profits and mitigating risks in an industry that is already experiencing volatility.

However, Intel’s financial struggles and declining revenue have led to industry speculation about its future. Reports indicate that major chipmakers Taiwan Semiconductor Manufacturing Company (TSMC) and Broadcom may be considering acquiring Intel or even splitting the company apart.

“Whoever takes, you know, buys those pieces of Intel integrated into their business, and Ohio will become a branch plant for the fab,” Hill noted.

Despite these uncertainties, Intel remains committed to completing its two fabs in Ohio, but the long-term fate of the company remains an open question.