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Incoming Chip Tariffs? Buy Nvidia/AMD/ARM/Broadcom When They Tank in Coming Days!!!

  • Oriental Tech ESC
  • May 13
  • 3 min read

The Trump administration, led by Commerce Secretary Howard Lutnick, is pushing hard to bring chip manufacturing back to the U.S., citing national security and job creation. But is it as simple as reshoring jeans or sneakers?


Semiconductor manufacturing isn’t just complex—it’s a different beast altogether. Unlike apparel, which requires basic machines and low-skill labor, chip production demands a finely tuned ecosystem developed over decades.


Let’s break it down:


  1. Water: Semiconductor fabs require ultra-pure water, free of contaminants down to parts per trillion, to clean silicon wafers. A single impurity can ruin a $20,000 wafer. In Arizona, where TSMC is building a fab, local water needs costly purification, and drought risks loom large.


  2. Air Quality: Cleanrooms must be 100,000 times cleaner than a hospital because even a speck of dust can destroy a chip. U.S. locations like Phoenix or Austin often require additional filtration to combat pollution or dust, unlike Taiwan’s purpose-built science parks.


  1. Manufacturing Process: Producing advanced chips, such as those at the 3nm node for AI and smartphones, involves 500-1,000 steps, each requiring years of testing to perfect. Initial yields—the number of usable chips from a wafer—are low (20-50%) and take 2-5 years to reach 90%, where profitability begins. A 1% yield improvement can save $100 million annually, but U.S. engineers are facing a steep learning curve. Unlike T-shirt factories, where defects can be fixed in hours, chip fabs need 10+ years to mature.


  1. Workforce Challenges: U.S. engineers often avoid fab jobs due to the grueling cleanroom shifts and lower pay ($80,000-$120,000) compared to AI software roles ($150,000-$300,000). The U.S. is projected to face a shortage of 67,000 semiconductor workers by 2030, with too few tech graduates entering the field. Meanwhile, Taiwan trains thousands of fab-ready engineers every year, a pace the U.S. struggles to match.


The administration’s tariff-heavy approach (50-100% on imported chips) assumes companies can flip a switch and build U.S. fabs. But Lutnick’s bold claim—“We’re going to take chip manufacturing from Taiwan”—glosses over these realities. He might be a good financier, but definitely ignorant on semiconductor manufacturing tech. Moving a semiconductor fab takes 10+ years and hundreds of US$ billions, with no guarantee of matching Taiwan's efficiency


Where does this leave industry leaders like Elon Musk? His companies, Tesla and xAI, design and use over 100,000 AI chips, relying on TSMC’s high-yield fabs. Musk has firsthand experience with the “insanely complicated” nature of chip production, having navigated shortages in 2021. His insights could be invaluable in understanding the practical challenges of such policies.


The U.S. can certainly build a robust chip industry, but applying tariffs on imported semiconductor chips is completely wrong. The U.S. should focus on the high-value semiconductor design industry and use 'carrots'—incentives—to attract companies to move manufacturing back to the U.S. at a sustainable pace. Priorities should include developing the necessary water and air infrastructure, investing in workforce training, and setting realistic timelines—thinking in decades, not years. The CHIPS Act is a significant step forward, allocating $13 billion for workforce training and research. However, there are concerns that this may not fully address the projected shortages and the comprehensive needs of building a competitive semiconductor ecosystem. Without these foundational elements, the risk is building costly factories that still can’t compete on a global scale.


Some may argue that this perspective is overly pessimistic. However, one only needs to observe Apple and its Contract manufacturers, which have hesitated to reshore their operations to the U.S. And keep in mind—compared to TSMC’s semiconductor fabrication plants, Apple’s iPhone and accessories assembly lines resemble basic manufacturing like shoemaking. If Apple’s contractors struggle to find enough workers for their production lines, that is hard evidence that securing a sufficiently skilled workforce to support semiconductor manufacturing would be an even greater challenge—even if companies were willing to relocate.



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