US Plans 1:1 Chip Production Rule to Curb Overseas Reliance
The US intends to urge chip manufacturers to equal the amount of semiconductors their clients are presently sourcing from foreign suppliers via local production, or face a tariff.
President Donald Trump has reinforced his initiatives to bring semiconductor manufacturing back to the U.S., providing exemptions from approximately 100 percent tariffs on chips to companies that produce them domestically.
Reports indicate that companies unable to maintain a 1:1 ratio between domestic production and imports over time would encounter tariffs.
US Commerce Secretary Howard Lutnick proposed the idea to semiconductor executives, suggesting it could be essential for economic security, according to reports.
"The newspaper quoted White House spokesperson Kush Desai stating, 'America must not depend on imports for the semiconductor products that are critical for our national and economic security,' further noting that any information regarding policymaking should be considered speculative until formally confirmed."
The US Commerce Department and the White House did not promptly reply to Reuters' inquiries for comments.
Trump's actions have prompted both domestic and global firms to invest hundreds of billions of dollars in growing US manufacturing.
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According to the report, a company committing to produce chips in the US would earn credits for that promised volume, permitting tariff-free imports until the facility is operational, with initial support to boost capacity.
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The 1:1 rule would be quite challenging to execute and would probably require many years. "It might actually help companies that already operate US fabs," stated John Belton, portfolio manager at Gabelli Funds, which owns shares in Global Foundries, Intel, and additional US chip manufacturers.
Shares of GlobalFoundries, the third-largest contract semiconductor producer globally, and the troubled chip company Intel both increased by 5 percent. The two firms are among the limited semiconductor manufacturers with notable production capabilities in the US.
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GlobalFoundries, located in Malta, New York, has a $16 billion investment strategy that encompasses factory expansions in Vermont and New York.