US chip makers prepare for pain as US-China trade dispute escalates with attacks on Huawei
- China is the biggest purchaser of semiconductors globally
- Strict export restrictions on emerging technologies could lead US companies to lose as much as $56.3 billion in revenue over five years, report finds
US chip makers are coming to grips with the costs of an escalating trade dispute between the US and China as President Donald Trump steps up tariffs and sharpens his attacks on Huawei Technologies Co.
The emerging consensus: the price will be high.
“We’re all going to suffer in this industry if we do not get this thing resolved,’’ said Tom Caulfield, chief executive officer of Globalfoundries Inc., the largest US contract manufacturer of chips. “Even though you try to do the right thing and force a better balance in trade, it could have negative consequences.’’
The presidential order banning the sale of US technology to Huawei provides a clear illustration of just how interconnected the global supply chain has become – it’s almost impossible to avoid hurting domestic companies in the process of pressuring their Chinese customers and rivals. Over the years, the semiconductor industry has lobbied multiple administrations arguing for protection from alleged overseas efforts to steal its inventions. Now, measures meant to shield US interests may hurt chip makers as much as they help.
Caulfield’s company has plants in New York state, Germany and Singapore. On the surface, that makes him look well-positioned to take advantage of any migration of orders away from China. But that is a simplistic view that does not take into account where electronics parts originate and where they end up, he said. For example, a chip may be designed in California; manufactured in Taiwan or another part of Asia; shipped to Malaysia or the Philippines for packaging; then sent on to China for inclusion in a device. From there, the gadget could be sold locally or shipped anywhere in the world, including the US
“The supply chains in the semiconductor industry are completely entangled,’’ he said. “We cannot separate them.’’