White House Considers Semiconductor Tariffs to Boost Domestic Manufacturing, Possibly Benefiting Intel
WASHINGTON - September 27, 2024 – The Biden administration is reportedly considering a new policy aimed at reducing U.S. reliance on foreign-made semiconductors, a move that could considerably benefit Intel adn its domestic manufacturing capabilities.According to sources cited by The wall Street Journal, the proposed plan would require semiconductor companies to manufacture domestically a quantity of chips equivalent to those they import from overseas, or face tariffs of approximately 100%.
The policy shift comes as Intel navigates challenges with its next-generation 18A node, experiencing yield issues linked to performance adjustments made to its Panther Lake CPUs. Intel CFO David Zinsner recently stated the company is “in a really good place on the performance” of 18A, but acknowledged yield stabilization was delayed due to these adjustments, adding, “We are making kind of steady incremental enhancement on yields…and we’ll take those learnings to help us on 14A.”
The potential tariffs could incentivize fabless semiconductor companies – those that design chips but outsource manufacturing – to utilize IntelS U.S.-based fabrication facilities. Intel’s stock closed 4.44% higher following reports of the rumored plan.
However, switching manufacturing nodes is a complex undertaking. Redesigning chips for a different manufacturer’s process, like potentially moving from Intel’s 18A to TSMC‘s N2 node for the Nova Lake CPU line (as rumored following Panther Lake difficulties), can be time-consuming. TSMC already operates fabs within the U.S., in Arizona.
Intel’s success hinges on achieving strong yields and performance with both the Panther Lake and Nova Lake lines to attract external customers and demonstrate the viability of its advanced manufacturing nodes. The company has also cautioned that its 14A node may be paused or discontinued if it fails to secure important external business, as detailed in a recent SEC filing (10-Q).
