Trump Administration's Proposed Changes to CHIPS Act Could Impact AI Growth and Consumers
President Donald Trump's recent threats to alter federal government contracts with chipmakers and impose new tariffs on the semiconductor industry have raised concerns about the potential impact on the tech sector's growth, particularly in artificial intelligence (AI) research. Trump's proposed measures, including tariffs on foreign chip production and potential changes to the CHIPS and Science Act, could introduce obstacles for the industry's advancement.
Economic experts have cautioned that these actions could hinder the administration's goal of maintaining a competitive edge in AI research. Saikat Chaudhuri from U.C. Berkeley's Haas School of Business highlighted the significance of chip production for AI development, noting that most countries are striving to promote chip manufacturing and imports at favourable rates. The shortage of chips during the pandemic affected various sectors, from AI to automotive, underscoring the importance of a stable supply chain.
The CHIPS and Science Act, introduced during the Biden administration, aimed to address supply disruptions caused by the pandemic and reduce reliance on foreign chip suppliers. By August 2024, the Act had allocated $30 billion to support projects across 15 states, creating thousands of jobs and enabling the U.S. to produce a significant portion of advanced computer chips domestically. This initiative marked a shift from previous administrations and sought to enhance national security by reducing dependence on Asian suppliers.
While the Biden administration supported investments in U.S. chip foundries, Trump has expressed scepticism about providing financial incentives to companies like Taiwan Semiconductor Manufacturing Co. (TSMC) to boost domestic chip production. Trump's stance on imposing tariffs on companies that do not manufacture chips in the U.S. without government assistance has raised concerns about potential price hikes for consumer goods that rely on semiconductors.
Experts warn that broad-based tariffs could have negative repercussions on the tech industry, impacting companies like Nvidia and increasing costs for consumers. Brett House from Columbia Business School emphasised that tariffs on imported chips would significantly raise costs for the AI sector, potentially hampering innovation and future investments in the industry. Maintaining openness to global markets and technological advancements has been crucial for American success in the tech sector.
Trump's proposed changes to the CHIPS Act and semiconductor tariffs could impact AI growth and consumer prices.
The CHIPS and Science Act aimed to boost domestic chip production and reduce reliance on foreign suppliers.
Experts warn that tariffs on imported chips could increase costs for businesses and consumers, affecting the tech industry's competitiveness.
Source: AP NEWS