Tariffs on chips and electronics components were on everybody’s minds at Intel Foundry Direct Connect this week, but few were willing to let the uncertainty get in the way of progress.
When asked about the Trump imposition of tariffs of up to 145% on electronics from China, several attendees just shrugged or harumphed, or as one man said, “Don’t get me started.”
The subject came up in a more formalized way with a panel of industry leaders speaking before the hundreds of foundry customers that broadly refused to get preoccupied with politics and instead looked at tariffs from a supply chain perspective.
When Kevin O’Buckley, general manager of Foundry Services for Intel, noted that semiconductor sales have long been expected to reach $1 trillion globally by 2030, he added, “What would that be with 145% added on?” Indeed, four other panelists mostly dodged his question, but Chris Miller, author of the book “Chip War” did offer, “We’ll see if people buy fewer of them,” should the price go up that much.
In fact, the panel agreed that AI is driving more and more zest for companies to buy silicon in various forms to take advantage of ever-emerging applications, including physical AI, or robots in various forms.
What tariffs mean for companies is similar to what is taught in Supply Chain 101 about the need to dual source every component. But as Miller noted in a keynote address, there would be thousands of components in a typical laptop making the task of dual sourcing complex.
O’Buckley estimated it would cost Intel $20 billion to make investments outside the US to set up a fab to produce the 18A process node.
Sriram Srinivasan, the general manager of Silicon Manufacturing for Microsoft, said there would be a need to dual source tens of thousands of components to do what Microsoft does today. “It would be a big investment for us” to dual source components, added Vince Hu, CVP at MediaTek.
Dual sourcing would come into play especially if the Trump administration cannot reach a tariff deal with China where most US electronics companies receive a large number of their components. Theoretically, these companies could source them in one or two other countries with lower tariffs, but the process would take years and add costs. In addition to the costs of possibly building dual source fabrication facilities, companies would face a difficult time finding labor to staff them, the panel said.
Even with the daunting concerns that high tariffs impose, the panelists were generally optimistic about the state of the silicon industry, as AI grows and makes AI accelerators more important.
Hu said he thinks the future is not as desperate as many would think. “The semiconductor industry is back. Our impact is high, and it will create a lot more jobs. This could be a golden age.”
Srinivasan added, “We have so many options. It’s a great time and we’re lucky to be in this time. Take it all in and make great products.”
There was no applause, but no groans either.
