Introduction
The looming threat of tariffs could sharply increase the cost of semiconductor production in the U.S., according to reports. While former President Trump briefly paused the imposition of new tariffs, concerns over future duties remain high. Specifically, a 20% tariff on chipmaking equipment could significantly impact companies like TSMC and Intel, increasing their expenses by billions and the new tariffs would likely target gear from suppliers like ASML, which are critical for producing cutting-edge semiconductors.
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Key Points:
Trump’s Tariff Delay: The former president delayed new tariffs for 90 days, but concerns linger over their eventual impact.
Impact on TSMC: If tariffs go into effect, TSMC’s U.S. investment could rise by $6 billion or more due to higher equipment costs.
High-NA EUV Machines: ASML’s High-NA EUV machines, essential for advanced chip production, could become even more expensive.
Potential Price Increases: Specialty chemicals and raw materials from overseas could also cost more.
Intel’s Advantage: Intel may face fewer tariff-related challenges as it has already invested in expensive chipmaking machines.
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Tariffs Targeting Semiconductor Equipment
The recent BITS & CHIPS report reveals that chipmaking equipment may be excluded from tariff exemptions, potentially adding a significant burden on semiconductor companies.
Despite some tariffs being delayed, the lack of an exemption for equipment like ASML’s EUV machines means that companies such as TSMC could face up to 20% higher costs on essential tools.
These tools are necessary for manufacturing the most advanced chips used in smartphones, computers, and other devices.
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TSMC’s U.S. Investment at Risk
In March 2025, Taiwan Semiconductor Manufacturing Company (TSMC) announced a $100 billion investment to expand its U.S. presence.
However, analysts estimate that $65 billion of this sum will be allocated for chipmaking equipment.
If tariffs on equipment from the EU and Japan are enforced, TSMC’s overall costs could surge by as much as $6 billion. The high costs are largely due to ASML’s state-of-the-art High-NA EUV machines, which can cost up to $350 million each.
With a 20% tariff, TSMC may face tens of millions of dollars in additional expenses for each machine.
Rising Costs for Raw Materials and Chemicals
It’s not just the cost of equipment that is expected to rise. TSMC also relies heavily on overseas suppliers for essential raw materials, including photoresists and electronic-grade sulfuric acid, which are crucial in chip manufacturing.
These chemicals are predominantly sourced from Japan. As a result, any tariff on materials or chemicals could further inflate production costs, compounding the challenges semiconductor companies face as they expand in the U.S.
The Risk of Price Hikes
As TSMC continues to invest in U.S. manufacturing, it will likely face rising operational costs. However, there is an additional concern: the potential for higher consumer prices.
If TSMC passes on these increased production costs to clients, major players like Apple could feel the impact. This could ultimately hurt demand for products that rely on semiconductors.
While TSMC has technological advantages that might offset some of the cost increases, consumer pushback remains a significant risk.
Intel’s Position: A Different Story
While TSMC is bracing for a potential price surge, Intel may have a slight edge. The company has already installed High-NA EUV machines as part of its 18A manufacturing technology. These machines, which cost hundreds of millions of dollars, are crucial for next-generation chips. Intel’s decision to invest early in these advanced machines could shield the company from the immediate impact of new tariffs.
Intel’s 18A process technology is set to enter mass production later this year with a next-generation PC chip. The company’s early adoption of these tools may reduce the potential cost hikes associated with tariffs.
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The Road Ahead for Semiconductor Manufacturers
As the situation continues to evolve, the semiconductor industry faces several challenges, including the uncertain impact of tariffs.
While Trump’s temporary tariff delay provides a short-term reprieve, the looming 20% tariffs on critical chipmaking equipment remains a concern for companies like TSMC and Intel.
The potential cost hikes for U.S. fabs could change the landscape of semiconductor manufacturing, impacting both manufacturers and consumers.
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Conclusion
For now, semiconductor giants must navigate rising costs, potential pushback from clients, and the ongoing risk of tariffs.
The full extent of these challenges won’t be clear until the situation unfolds further. However, one thing is certain: the global semiconductor market will continue to feel the effects of these geopolitical decisions for years to come.
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