Weekly: Tariffs damage US AI strategy; Chips not really exempt
3.5 min read.
Not much this week, presumably as the erratic tariff strategy makes it hard to write longer pieces.
Highlights
Tariffs damage US AI strategy. SemiAnalysis writes that Trump’s tariffs are critically detrimental to America’s AI strategy. Higher prices is one thing but it is also the shattering of trust and stability in the American financial/economic system that will damage the U.S.’ potential for innovation and progress.
Chips not really exempt. WIRED goes into the gory detail of trade restrictions and finds that even though semiconductors were ostensibly exempt from the tariffs, the vast majority of semiconductors that the U.S. imports technically do not qualify for the exemption. Semiconductors packaged inside phones, servers, and other products are not exempt. Chipmaking equipment is not exempt. Even certain GPUs that do not fall under the narrow trade category cited by the Trump tariffs are not exempt. Not to mention the overall impact from all the other goods that directly or indirectly feed into the chipmaking process. As well as the general health of the economy and international trade system…
Thanks for reading.
Weekly Chip Briefing: April 05 – April 11, 2025
Dylan Patel, Jeremie Eliahou Ontiveros, Maya Barkin, Patrick Zhou, Jeff Koch, Sravan Kundojjala, Reyk Knuhtsen, Christopher Seifel and Wega Chu, “Tariff Armageddon? | GPU Loopholes, Mexico Supply Chain Shift, Wafer Fab Equipment Vulnerabilities, Optical Module Pricing Surge, Datacenter Equipment,” SemiAnalysis, 04/10/2025.
Will Knight and Zeyi Yang, “Trump’s Tariffs Are Threatening the US Semiconductor Revival,” WIRED, 04/05/2025.
1.
By Dylan Patel, Jeremie Eliahou Ontiveros, Maya Barkin, Patrick Zhou, Jeff Koch, Sravan Kundojjala, Reyk Knuhtsen, Christopher Seifel and Wega Chu, “Tariff Armageddon? | GPU Loopholes, Mexico Supply Chain Shift, Wafer Fab Equipment Vulnerabilities, Optical Module Pricing Surge, Datacenter Equipment,” SemiAnalysis, 04/10/2025.
The buildout of AI infrastructure in the US has reached a macro-level scale, and ensuring continuous growth will require ample availability of capital. We believe that the economic uncertainty induced by Trump tariffs could become the single largest barrier to American AI supremacy. With Scaling Laws still very much alive, tens of billions of dollars of capital expenditures are required by leading AI Labs to keep improving the quality of their products & systems at this incredible pace.
But economic uncertainty often leads to delays, and delays leads to contractions. In a worst-case scenario, America’s foreign policy could trigger a global recession and force leading AI labs to abandon their training efforts to preserve cash.
Fortunately, on a micro level, our research indicates that the tariffs will not impact (for the most part) the competitiveness of the United States in AI infrastructure costs but rather through capital accessibility. In this report, we show our findings and deep dive into tariffs, loopholes, and global trade for AI-related infrastructure equipment.
The report will examine the details of Trump’s Liberation Day tariffs and their impact on AI infrastructure. It will cover GPU/XPUs and servers, networking, data center cooling and electrical equipment, and semi-cap. We also analyzed each of these supply chains and their trade dynamics to better gauge the situation.
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Will Knight and Zeyi Yang, “Trump’s Tariffs Are Threatening the US Semiconductor Revival,” WIRED, 04/05/2025.
Silicon Valley let out a sigh of relief on Wednesday when it learned that President Donald Trump’s tariff bonanza included an exemption for semiconductors, which, at least for now, won’t be subject to higher import duties. But just three days later, some US tech companies may be finding that the loophole actually creates more problems than it solves. After the tariffs were announced, the White House published a list of the products that it says are unaffected, and it doesn’t include many kinds of chip-related goods.
That means only a small number of American manufacturers will be able to continue sourcing chips without needing to factor in higher import costs. The vast majority of semiconductors that come into the US currently are already packaged into products that are not exempt, such as the graphics processing units (GPUs) and servers for training artificial intelligence models. And manufacturing equipment that domestic companies use to produce chips in the US wasn’t spared, either.
Stacy Rasgon, a senior analyst covering semiconductors at Bernstein Research, says the narrow exception for chips will do little to blunt wider negative impacts on the industry. Given that most semiconductors arrive at US borders packaged into servers, smartphones, and other products, the tariffs amount to “something in the ballpark of a 40 percent blended tariff on that stuff,” Rasgon says, referring to the overall import duty rate applied.
Rasgon notes that the semiconductor industry is deeply dependent on other imports and on the overall health of the US economy, because the components it makes are in so many kinds of consumer products, from cars to refrigerators. “They are macro-exposed,” he says.
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