Semiconductor Industry News - March 2025

Semiconductor Tariffs and China's Growing Influence in the Global Market - March 7th, 2025

Each new week in 2025 brings uncertainty and change that promises to reshape the global semiconductor supply chain. United States President Trump spent most of his first few weeks in office making significant moves to achieve his “America First” trade policies. These moves have increased concerns among companies and end-users, as tariffs could impact consumers struggling with high prices.  

The U.S. is considering imposing new tariffs, and China has surged ahead in semiconductor production, particularly in memory technologies like DRAM and NAND. According to a new report by Chosun Biz published in the Korean Institute of Science and Technology Evaluation and Planning (KISTEP), China's semiconductor industry has quickly surpassed South Korea in foundational capabilities across all technology sectors.

The Impact of U.S. Tariffs on the Semiconductor Supply Chain

Tariffs have been a hot topic in U.S. trade policy since Trump began his second term. In the last few weeks, Trump has passed or is considering passing tariffs on China, Canada, Mexico, Taiwan, and the EU, promising steeper ones if specific requirements are unmet. Recently, amid growing tensions, Trump proposed broadening the scope of U.S. tariffs to include automobiles, pharmaceuticals, and semiconductors.  

Trump told reporters that the tariffs would likely be around 25% and go “substantially higher over a course of a year.” These suggested tariffs could begin as early as April 2nd.  

This aggressive addition is a broadening of the previous 25% tariffs on steel and aluminum imports set to take effect in March. Trump said the earlier tariffs have worked, indicating that the upcoming tariffs will most likely be implemented.  

“I’ve been contacted by some of the biggest companies in the world, and because of what we’re doing economically and through tariffs and incentives, they want to come back into the United States,” he said.

“When they come back into the United States and they have their plant or factory here, there is no tariff,” Trump added. “So, we want to give them a little bit of a chance.”

Ophelia Chan, Senior Business Fundamentals Analyst at GlobalData, shares that these tariffs “would drive up drug prices for U.S. patients, exacerbate drug supply shortages, and push manufacturers to seek alternative markets.”

Regarding semiconductors, Trump did not state when they would happen, but it would significantly impact TSMC, which supplies 90% of the globe’s advanced semiconductors and 60% of all semiconductors. If enacted, the law will cause U.S.-based companies, which rely heavily on overseas semiconductor manufacturing, to face higher production costs and delays in securing necessary components.

A potential escalation of this trade war could further strain international production, especially in the semiconductor industry. Countries that rely on importing components for advanced technology might experience difficulties securing these critical electronic components. This could increase costs and reduce availability across the tech sector globally.

The semiconductor industry has vocally reacted to these tariffs. German Association of the Automotive Industry (VDA) President Hildegard Müller has expressed concerns that such tariffs would negatively affect global trade. Increased protectionism could harm manufacturing capabilities, country relations, and the U.S. economy.  

“Tariffs are the wrong negotiating tool,” said Müller. “The risk of a global trade conflict with negative effects on the world economy is high. If tariffs are responded to with counter-tariffs or other measures, a spiral is set in motion, which also means that consumers have to pay more. Instead of fighting inflation, as promised, US President Donald Trump is fueling inflation in the USA.”

Semiconductor Industry Association (SIA) President and CEO John Neuffer’s statement echoed Müller’s concerns regarding the overuse of tariffs and how it might derail semiconductor industry plans.

“We’re encouraged by President Trump’s goals of restoring U.S. trade leadership, promoting American strength in semiconductors, and reindustrializing our country. We understand tariffs are a tool in the trade policy toolbox. If not approached carefully, tariffs could make it significantly more expensive to develop and produce Made-in-America semiconductors and the many critical technologies they enable, including artificial intelligence.”

As the U.S. navigates its trade relationships, the semiconductor industry must adapt to these shifting dynamics or risk jeopardizing future innovation and global competitiveness.

How China's Rise in Semiconductor Technology Could Reshape Memory Markets

Since the global semiconductor shortage, countries have worked overtime to establish their own domestic semiconductor ecosystems. Like the U.S. and the EU, China has been pouring resources into developing its semiconductor manufacturing capabilities. Specifically, several Chinese companies have been ramping up production to challenge the top three suppliers in memory.

According to Chosun Biz, part of that goal has been accomplished. In a recent report published by the KISTEP, China has “surpassed South Korea in foundational capabilities across all technology sectors, with the exception of advanced packaging.”

This includes the memory sector, the darling of South Korea, which top memory producers Samsung Electronics and SK Hynix call home.  

KISTEP states that in 2022, “South Korea held the second spot after the U.S. in the memory and advanced packaging technology sectors among five semiconductor technology fields. Meanwhile, in areas such as AI semiconductors, power semiconductors, and sensors, South Korea ranked 4th and 5th, among countries such as China, Japan, the EU, and the U.S.”

A further evaluation in 2024 revealed that, while 100% represents the highest level, South Korea’s high-density resistive memory technology only scored 90.1%. This is impressive, but it trails behind China’s 94.1%.

Meanwhile, Taiwan ranks first in advanced packaging technology commercialization, and the U.S. leads in all other technology sectors, including foundational capabilities and commercialization perspectives.  

KISTEP also notes that China has surpassed South Korea significantly in other areas, including AI semiconductor technology, power semiconductors, and next-generation high-performance sensing technology. The two are evenly matched in foundational capabilities regarding advanced packaging technology at 74.2%

The report concludes South Korea ranks lowest among the evaluated countries, specifically in foundational capabilities and design technology levels. This is poignant for South Korea’s semiconductor life cycle and where improvements should be made. KISTEP states that the issues contributing to this challenge are “the exodus of core talent, AI semiconductor technology, U.S.-China competition, South Korea’s domestic-focused policies, and rapid shifts in the supply chain.”

There is a possibility that this reflected change, especially within memory, could influence pricing and availability of key components in DRAM and NAND, which experts early expressed concerns over a “flood of DRAM components” with China’s growing push within the sector. This move could benefit companies seeking to lower costs and increase their exposure to geopolitical risks as global tensions rise.

As China continues investing in its semiconductor industry, its role in the global supply chain will only expand. This will inevitably challenge existing market leaders and reshape global trade patterns, particularly in the memory sector.  

As the trade war between the U.S. and China escalates and China continues to advance in memory production, these developments will affect everything from pricing and availability to global competition structure. The semiconductor industry must adapt to these changing dynamics to maintain a competitive edge in the ever-evolving tech landscape.