Trump sets the pace for the semiconductor industry

The explosion of generative artificial intelligence (AI) has positioned the semiconductor industry as the hottest sector. Proof of this is Nvidia's stock market performance, which in a short time has dethroned the rest of the technology companies—the so-called Magnificent Seven—to become the most valuable company in the world. The potential of this sector and its geostrategic value have not gone unnoticed in the White House, where its tenant, US President Donald Trump, surprised everyone this past week with a tax on the sector's exports to China, directly impacting Nvidia's business, as well as that of other companies, such as AMD.

The 15% tariff on these companies' sales with the Asian giant is just the latest chapter in the trade war with China. Last spring, the US halted semiconductor business with the Asian giant when it ordered American EDA (electronic design automation) software companies to stop selling their advanced solutions to Chinese groups. The economic impact on Nvidia was significant. The company had designed this chip specifically to meet the requirements imposed by then-President Joe Biden to limit China's access to advanced artificial intelligence technology.

Economic and political analysts are astonished by this move. “What we’re seeing is, in effect, the monetization of U.S. trade policy, where American companies must pay the U.S. government for permission to export. If that’s the case, we’ve entered a dangerous new world,” Stephen Olson, a former U.S. trade negotiator and now a senior fellow at the Singapore-based Yusof Ishak Institute, told Bloomberg.

For now, Nvidia can only sell the H20 chip to China. At the same press conference where the deal was announced, Trump considered the option of the company selling its most advanced chip, Blackwell, although he introduced the possibility that the US government could retain between 30% and 50% of the sales revenue from that chip. In fact, Treasury Secretary Scott Bessent, in a statement, opened up to the possibility that the United States could apply the same tax model to more sectors.

That same week, the tycoon closes a multi-million dollar deal with Apple and is considering a stake in Intel.

Another front Trump has opened in recent weeks has been with Intel, a struggling semiconductor giant. The president requested the resignation of CEO Lip-Bu Tan, who took office this year to try to refloat the company. The request for his resignation was based on two accusations. The first is that Cadence Design Systems, the executive's previous company, recently pleaded guilty in a criminal case for the illegal sale of products in China, allegedly under his leadership (2009-2021). The second points to alleged investments by this Malaysian-born executive in Chinese companies. Days later, Trump praised the executive's record in a face-to-face meeting. "Mr. Tan and members of my Cabinet will be spending time together and presenting suggestions to me over the next week," the president assured.

The mystery didn't last long. Intel shares soared more than 7% on Thursday after Bloomberg reported that the US was considering a stake in the Santa Clara, California-based company. The capital injection would allow Intel to reposition itself in the market, although it could face some setbacks.

The Trump administration's strategy has also had an impact on imports. The US government has been threatening for months to implement a 100% tariff on sales of international companies in the country. Last Friday, before embarking on his trip to Alaska, the magnate announced that he would unveil the final tariff next week or the following week. The only option for companies that buy chips abroad is to commit to investments. Taiwan's TSMC announced last March a $100 billion investment in its Arizona complex, although Trump recently raised that figure to $300 billion. The Chinese government, with geopolitical interests in Taiwan, lamented the initial announcement and warned that if the figure ends up being the one proposed by Trump, it could be catastrophic for the development of the industry in the region.

The pressure isn't just on foreign companies. Apple, one of the icons of Silicon Valley, has been in Trump's crosshairs since the start of his term. The Cupertino, California-based company outsources its iPhone and other product manufacturing overseas, primarily to China and other Asian countries, and would therefore be forced to pay tariffs to sell its products. However, Apple promised multimillion-dollar investments in the United States to obtain the exemption. Last week, Tim Cook attended the meeting with Trump with a personal gift for the president: a company plaque on a gold bar, and an announcement of $600 billion in investments.

The US imposes a tax on its own chip companies for trading with China.

Trump appears to have taken the semiconductor industry's measure. As negotiations with China continue over the next 90 days, further measures are likely. However, all this pressure doesn't appear to be softening Xi Jinping's government in the negotiations.