Trump’s latest chip tariff announcement raises more questions than answers
U.S. President Donald Trump speaks to reporters near Air Force One at the the Lehigh Valley International Airport on August 03, 2025 in Allentown, Pennsylvania.
Anna Moneymaker | Getty Images
After months of speculation, U.S. President Donald Trump has divulged more of his semiconductor tariff plans, but his latest threats might raise more questions than answers.
On Wednesday, Trump said he will impose a 100% tariff on imports of semiconductors and chips, but not for companies that are “building in the United States.”
As semiconductors represent an over $600 billion industry at the heart of the modern digital economy, any potential tariffs hold massive weight.
However, experts say the President has yet to provide key details on the policy, which will ultimately determine their full impact and targets.
“It’s still too early to pin down the impact of the tariffs on the semiconductor sector,” Ray Wang, research director of semiconductors, supply chain and emerging technology at The Futurum Group, told CNBC.
“The final rule is likely still being drafted and the technical details are far from clear at this point.”
Big players win?
One of the biggest questions for chip players and investors will be how much manufacturing a company needs to commit to the U.S. to qualify for the tariff exemption.
The U.S. has been working to onshore its semiconductor supply chain for many years now. Since 2020, the world’s largest semiconductor companies such as TSMC and Samsung Electronics have committed hundreds of billions of dollars to building plants in the U.S.
Speaking to CNBC’s “Squawk Box Asia” on Thursday, James Sullivan, Managing Director and Head of Asia Pacific Equity Research at J.P. Morgan, said this could mean most major chip manufacturers receiving exemptions.
If this is the case, the policy could have the effect of “continuing to consolidate market share amongst the largest cap players in the space,” Sullivan said.
Indeed, shares of major Asian chip companies like TSMC, which has significant investments in the U.S., rose in Thursday morning trading following Trump’s announcement. Early this year, TSMC announced it would expand its investments in the U.S. to $165 billion.
Shares of South Korea’s Samsung and SK Hynix — which have also invested in the U.S. — were also trading up after a Korean trade envoy reportedly said on radio that the duo would be exempt from the 100% tariffs.
An exemption on what?
Beyond the question of exemptions, many other aspects of the potential tariffs remain unclear.
Speaking on CNBC’s “Squawk Box Asia,” on Thursday, Stacy Rasgon, senior U.S. semiconductor analyst at Bernstein, noted that most of the semiconductors that enter the U.S. come inside consumer goods such as smartphones, PCs and cars.
For example, in 2024, the U.S. imported $46.3 billion of semiconductors — only about 1% of all U.S. imports, according to the Information Technology and Innovation Foundation.
While Rasgon said tariffs on these imports may be manageable, broader tariffs would be harder to deal with.
“What we don’t know with [Trump’s] comments on tariffs, is it just raw semiconductors? Are there going to be tariffs on end devices? Are you going to be looking at tariffs on components within end devices?,” Rasgon asked.
The confusion and questions around semiconductor tariffs were brought to the forefront after the U.S. Department of Commerce started a national security investigation of semiconductor imports in April, just as the sector was exempted from Trump’s “reciprocal” tariffs.
The vague language from the Trump administration — though not invoked in the president’s latest proclamations — could theoretically be used to apply broad tariffs to an enormous segment of the electronics supply chain. It’s also unclear on the extent that semiconductor materials and manufacturing equipment used to manufacture chips would fall under the tariffs.
Complex supply chains
Potential tariff strategies could also be complicated by the intricate and interdependent nature of the semiconductor supply chain.
Rasgon gave the example of American chip designer Qualcomm, which sends their designs to TSMC to be manufactured in Taiwan and then imported to the U.S.
“Does that mean those [chip imports] would not be tariffed, because they’re made at TSMC, and TSMC is building in the U.S.?… I don’t know. Hopefully that’s how it would be,” he said.
Another large buyer of semiconductors in the U.S. are cloud service providers like Amazon Web Services and Google, which are essential to power Washington’s AI plans.
According to a recent report from ITIF, semiconductors contribute $7 trillion in global economic activity annually by underpinning a range of downstream applications including AI and “big data.”
In a potential sign of American companies seeking to move their chip supply chains into the U.S., Apple CEO Tim Cook, alongside Trump at the White house Wednesday, announced that it will be supplied chips from Samsung’s production plant in Texas.
The company also announced an additional $100 billion in U.S. investments, raising its total investment commitments in the country to $600 billion over the next four years.
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Altman and Musk launched OpenAI as a nonprofit 10 years ago. Now they’re rivals in a trillion-dollar market
Open AI CEO Sam Altman speaks during a talk session with SoftBank Group CEO Masayoshi Son at an event titled “Transforming Business through AI” in Tokyo, Japan, on February 03, 2025.
Tomohiro Ohsumi | Getty Images
On Dec. 11, 2015, OpenAI launched as a nonprofit research lab after Elon Musk and a group of prominent techies, including Peter Thiel and Reid Hoffman, pledged $1 billion to develop artificial intelligence for the benefit of humanity. The idea was for the project to be be free of commercial pressures and the pursuit of money.
A decade later, that founding mission is all but forgotten.
Musk, now the world’s richest person, is long gone, having created rival startup xAI. And he’s been engaged in a heated legal and public relations fight with OpenAI CEO and co-founder Sam Altman.
Far from the nonprofit realm, OpenAI has emerged as one of the fastest-growing commercial entities on the planet, zooming to a $500 billion private market valuation, with almost all of that value accruing since the company’s launch of ChatGPT three years ago. More than 800 million people now use the chatbot every week.
Musk’s xAI, meanwhile, is expected to close a $15 billion round at a $230 billion pre-money valuation this month, sources familiar with the matter told CNBC’s David Faber in late November.
OpenAI and xAI are two of the main companies, along with Google, Anthropic and Meta, pouring money into AI models, as the market rapidly evolves from text-based chatbots to AI-generated videos and more advanced compute-intensive forms of content, as well as into agentic AI, with large enterprises customizing tools to enhance productivity.
For OpenAI, the price tag is almost incomprehensible: $1.4 trillion and growing. That’s primarily for the mammoth data centers and high-powered chips required to meet what the company sees as insatiable demand for its technology. For now, OpenAI is a cash-burning machine going up against tech’s megacaps and their chip suppliers, drawing comparisons to earlier waves of high-growth tech firms that spent heavily for years to challenge behemoth incumbents, but to mixed results.
“OpenAI has a very big role in the in the history of the development of artificial intelligence, and will forever have that role,” said Gil Luria, an equity analyst at D.A. Davidson, in an interview. “Now, will that role be Netscape, or will it be Google? We’ve yet to find out.”
Nvidia CEO Jensen Huang speaks at an event ahead of the COMPUTEX forum, in Taipei, Taiwan, June 2, 2024.
Ann Wang | Reuters
It’s a position that would’ve been hard to imagine in 2016, when Nvidia CEO Jensen Huang hauled a black DGX-1 supercomputer up to OpenAI’s offices in San Francisco’s Mission District. The $300,000 machine had cost Nvidia “a few billion dollars” to develop, and there were no other buyers, Huang recalled recently on Joe Rogan’s podcast.
Musk, at OpenAI, was the only one who wanted it.
When Musk told him it was for “a nonprofit company,” Huang said all the blood drained from his face at the thought of parking such a costly box inside an organization that wasn’t meant to make money.
Behind the scenes, though, the nonprofit ideal was already under intense strain, and Musk didn’t like what he saw.
“Guys, I’ve had enough. This is the final straw,” Musk wrote in an email to his co-founders in 2017. He warned that he would “no longer fund OpenAI” if it turned into a tech startup instead of a nonprofit. Altman wrote back the next morning: “i remain enthusiastic about the non-profit structure!”
Altman vs. Musk
In February of the following year, Musk left the OpenAI board, and said at the time the move was to avoid a potential conflict of interest as his car company, Tesla, dove deeper into AI.
The story was more complicated.
Musk sued OpenAI and Altman in early 2024, alleging they abandoned the company’s founding mission to develop AI “for the benefit of humanity broadly,” and he’s regularly criticized OpenAI’s close ties to Microsoft, its principal backer. He also went to court to try and keep OpenAI from converting into a for-profit entity and, earlier this year, went so far as to try and acquire the AI lab for $97.4 billion.
In October, OpenAI announced it had completed a recapitalization, cementing its structure as a nonprofit with a controlling stake in its for-profit business, which is now a public benefit corporation called OpenAI Group PBC.
Musk isn’t the only early OpenAI team member who’s turned into a bitter rival. Siblings Dario and Daniela Amodei left OpenAI in late 2020 to form Anthropic, which said last month that Microsoft and Nvidia would invest in the company. The valuation from the funding round could reach as high as $350 billion.
Anthropic’s Claude family of large language models is one of the biggest competitors to OpenAI’s GPT models.
Altman is wagering that he can win the race by outspending the competition. While his company has sketched out plans for a trillion-dollar-plus AI infrastructure outlay, Anthropic has made roughly $100 billion in recent compute commitments, spaced out at various intervals over the next few years.
It all amounts to a giant bet that demand for AI services will continue apace.
“We’ve got all the various AI vendors making these huge capital investments,” said David Menninger, executive director of software research at ISG. “There’s a question as to how long those capital investments continue and whether or not they all pan out.”
Luria says Anthropic and others are making reasonable commitments based on their current growth trajectory and the funding they’ve already secured. But he said OpenAI’s approach has been based on a “fantastical set of commitments” with a “faint belief that those numbers are even possible.”
‘Pretty extreme’
Altman told CNBC in an interview on Thursday that OpenAI is already seeing enough demand to justify its spending plans, which “makes us confident that we will be able to significantly ramp revenue.”
“It’s obviously unusual to be growing this fast at this kind of scale, but it is what we see in our current data,” Altman said, adding that “the demand in the market is pretty extreme.”
Altman said last month that he expects annualized revenue to hit $20 billion by the end of this year and to reach hundreds of billions by 2030. Its historic pace of growth has been a big boon for major tech companies.
Oracle signed a roughly $500 billion deal to sell infrastructure services to OpenAI over five years. Chipmakers Advanced Micro Devices and Broadcom have woven OpenAI-linked demand into multi-year forecasts.
But Oracle’s shares plunged 11% on Thursday after the software vendor reported weaker-than-expected revenue, a miss that dragged down Nvidia, CoreWeave and other AI-related stocks. Despite a surge in long-term contract commitments from companies like OpenAI, Meta, and Nvidia, investors are growing concerned about Oracle’s debt load that’s fueling its buildout.
Still, venture capitalist Matt Murphy of Menlo Ventures, said that in his 25 years in the venture business, “this is the mother of all waves.”
Murphy, an early investor in Anthropic, said the combination of AI models, custom chips and hyperscale data centers adds up to the potential for trillion-dollar outcomes. That explains the eye-popping level of capital expenditures and the astronomical valuations, he said.
Altman recently declared a “code red” inside his company, and shuffled resources to focus on making ChatGPT faster, more reliable and more personal, while delaying work on ads, health and shopping agents and a personal assistant called Pulse. His declaration came after Google released its Gemini 3 model last month, further accelerating the search giant’s ascent in the market.
On Thursday, OpenAI unveiled ChatGPT-5.2, a faster, more capable reasoning model that the company says is its best system yet for everyday professional use. It also struck a three-year, $1 billion content and equity deal with Disney around the Sora AI video generator.
Altman downplayed the threat from Google, telling CNBC that Gemini had less of an impact on the company’s metrics than OpenAI initially feared.
“I believe that when a competitive threat happens, you want to focus on it, deal with it quickly,” Altman said.
He said he expects the company to exit code red by January.
— CNBC’s Kif Leswing contributed to this report.
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