US 50% China Semiconductor Tariff

[bdunham7]

Does he want to kill the remaining electronics production? It's literally forcing manufacturers to outsource the assemblies or full production abroad.

Are they actually not going to apply the tariff to Chinese-made semiconductors incorporated into an assembled PCB or product?  That seems implausibly stupid.

Also, how many semiconductors are typically actually "Chinese-made" as opposed to being reexported from China?

[nctnico]

Wasn't that when Japan was accused of "dumping" on the DRAM chips?

What's wrong with being able to buy DRAM cheaper for yourself? You have a lot of money left for other needs. Isn't that how the market works? Isn't that how American companies sold cheap printers with expensive inks? Why is the similar behavior of other countries dangerous for the United States?

The problem is more complicated than that. The price of goods is rarely related to the actual manufacturing costs. Price of commodity goods is often driven by supply, demand and companies trying to get into a market by artificially lower prices. The latter means selling at such a loss that the competition can't match the price and goes bankcrupt (or moves to making different products). Once the competition is out, the prices are jacked up to recover the losses. This is exactly what China is being accused off; selling products at unhealthy low prices in order to corner the market later on.

[coppercone2]

they better make people get off their ass and start making chips here

maybe more basic fabs. that would actually be cool, because it would make equipment and stuff cheaper if they had more local manufacturers doing 'basic' stuff. Like when the small scale local 74 series plant does PM and lists some old equipment. and it means high tech jobs without the ridiculous vetting process, because its no longer ivy league, just advanced technology. When they only make the 'worlds hardest' chips then its a super exclusive snoot club. this means you will get more trained people that have industry experiance to actually push technology forward because it will be easy to hire people for better jobs when they get some experience making basic stuff like diodes etc, not just a 1 off in a lab but small assembly lines and real business skills etc. And it might mean local jobs so you don't need to dedicate your life to moving to a specific expensive ass place like SV to get that dream job of working with UV or whatever, and the stress level should be lower because its not the super most cutting edge secret stuff.

[S. Petrukhin]

The problem is more complicated than that. The price of goods is rarely related to the actual manufacturing costs. Price of commodity goods is often driven by supply, demand and companies trying to get into a market by artificially lower prices. The latter means selling at such a loss that the competition can't match the price and goes bankcrupt (or moves to making different products). Once the competition is out, the prices are jacked up to recover the losses. This is exactly what China is being accused off; selling products at unhealthy low prices in order to corner the market later on.

It is likely that there is a problem to determine dumping or a competitor has a better organization.
In Japan, as far as I know, deflation and prices have been declining for a long time. After all, we are talking about the Japanese DRAM.

[SiliconWizard]

The likely short-term outcome (and who knows about the longer term) is further inflation (which is already not good) and a number of companies getting out of business.

When I first read this Tweet, I thought it was just a fake. It looked like a joke.

The question I asked in another thread recently (and which some have also raised here) remains: what about products *containing* chinese semiconductors, but said semiconductors not imported directly? We need to know.

Also, I'm all for rebuilding some lost industry in the West, but that should be done with some planning and intelligence, not in such a brutal way that looks like a joke. Just a thought.

[nctnico]

Also, I'm all for rebuilding some lost industry in the West

You don't want that at all. Just think about how the price of a product is build up. On average, 70% of the price of a mass produced product is earned in the sales process (wholesale and shops). Manufacturing earns like 5% to 10% of the retail price of a product. It is not interesting. The best way to make money is doing the design and sales. Leave manufacturing to low wage countries. Look at Apple for example. It makes no sense to do manufacting in 'the West' because people won't be able to make a living from doing manufacturing jobs. Anyone promising/wishing to bring manufacturing back to the the west is living in a pipe dream. Car manufacturing is the next thing to go away.

[thm_w]

Digikey just added 3Peak recently: https://www.digikey.ca/en/supplier-centers/3peak
As a random example, for their LMV358 you'd have to bring the price up ~56% to match TI's price. So thats oddly appropriate. Some of their other parts though are still competitive even with the increase (eg TI charges a lot more for motor drivers).

>Asks geo-political question.
"Dont you get into politics"

No geopolitical question was actually asked, the topic is highly political but that does not mean it is impossible to discuss only certain aspects of it.
If its not possible for certain people, then they lack self control.

The question I asked in another thread recently (and which some have also raised here) remains: what about products *containing* chinese semiconductors, but said semiconductors not imported directly? We need to know.

Its the same as before, if you get it assembled somewhere else you can probably get around the tariffs. Vietnam is a common one.

"Barnette also notes that some companies have workarounds by ordering from countries exempt from tariffs. Even if the components come from prohibited countries, if they’re packaged and labeled in a different country, the tariffs can be subverted. “There may be some price increases but not significant,” Barnette says."
https://www.securityinfowatch.com/integrators/article/55040548/pricing-impact-of-tariff-hike-on-semiconductors-may-be-small
https://www.law.cornell.edu/cfr/text/19/10.16

[S. Petrukhin]

Leave manufacturing to low wage countries.

Do you think these countries will agree to be slave labor for a long time? Isn't this the consequence with China now?

[SiliconWizard]

Leave manufacturing to low wage countries.

Do you think these countries will agree to be slave labor for a long time? Isn't this the consequence with China now?

It's obvious, even any moral consideration aside, that it's not sustainable anyway.

[nctnico]

Leave manufacturing to low wage countries.

Do you think these countries will agree to be slave labor for a long time? Isn't this the consequence with China now?

No, but there is a long list of next low wage countries in Asia, South America and Africa. Mexico for example, is the low wage country of choice of US based companies if they want to keep production close. But political stability in Mexico is an issue due to drugs related violence (which in turn is due to the huge market for drugs in the US).

[S. Petrukhin]

No, but there is a long list of next low wage countries in Asia, South America and Africa.

Are you imagine a mobile CHIP or car factory that tours different countries? 
Obviously, not only the labor force affects, but also the availability of resources, their price, taxes, climatic conditions and transport...

If you don't like Mexico, there's Canada nearby.  There is no crime on a tangible scale.
And in America itself, if you look, a lot of people are willing to earn less, but steadily. Government support in the form of health insurance, for example, can help this, etc. Most likely it will be so.

I don't think everything is bad and lost in the USA.  There are traditions of quality present, the peaks of technology, etc.
For example, I will buy an expensive Milwaukee instrument - it justifies its price.
There is more confidence in the products produced in the USA. But there is a big risk of political decisions.

When America returns to leadership as a model of a good life, not politics, everything will be fine. 

[coppice]

Digikey just added 3Peak recently: https://www.digikey.ca/en/supplier-centers/3peak
As a random example, for their LMV358 you'd have to bring the price up ~56% to match TI's price. So thats oddly appropriate. Some of their other parts though are still competitive even with the increase (eg TI charges a lot more for motor drivers).

You can't judge prices by what Digilkey lists. They are a small volume, high service distributor. Their prices can be almost random, depending on numerous factors. Try talking seriously to a vendor, or their main distributors, about a production volume purchase and prices will look very difference.

[S. Petrukhin]

You can't judge prices by what Digilkey lists. They are a small volume, high service distributor.

Many people have said this here: bigwigs of the business will not suffer, they will find a solution or concessions.
There will be difficulties for medium and small companies to which manufacturers will not open door.

[EEVblog]

BYD sales were down 43% on 1Q 2024 so Tesla is ahead again

Who is BYD?

Build Your Dream, Asian EV manufacturer.
Like Polestar (Asian/Volvo joint venture) they are big over there and growing fast.

BYD EV's are reasonably popular here in oz, you see a quite a few of them around Sydney.

[thm_w]

Digikey just added 3Peak recently: https://www.digikey.ca/en/supplier-centers/3peak
As a random example, for their LMV358 you'd have to bring the price up ~56% to match TI's price. So thats oddly appropriate. Some of their other parts though are still competitive even with the increase (eg TI charges a lot more for motor drivers).

You can't judge prices by what Digilkey lists. They are a small volume, high service distributor. Their prices can be almost random, depending on numerous factors. Try talking seriously to a vendor, or their main distributors, about a production volume purchase and prices will look very difference.

No they are not a good reflection of mass production runs in most cases, but many small companies with less than reel volumes source directly from digikey.

And if you look at the 3peak stuff they have quantities quoted up to 75,000pc: https://www.digikey.com/en/products/detail/3peak/TPM8837C-DF4R/22229148
You really think the price will come down much less than 9c per chip?

[tautech]

BYD sales were down 43% on 1Q 2024 so Tesla is ahead again

Who is BYD?

Build Your Dream, Asian EV manufacturer.
Like Polestar (Asian/Volvo joint venture) they are big over there and growing fast.

BYD EV's are reasonably popular here in oz, you see a quite a few of them around Sydney.

Quite a few here too but many more Tesla's.
The more discerning EV buyers are waking to Polestar which offers more than Tesla in comparable models.

[Bud]

If you don't like Mexico, there's Canada nearby. 

Labor is expensive in Canada.

I don't think everything is bad and lost in the USA.  There are traditions of quality present, the peaks of technology, etc.
For example, I will buy an expensive Milwaukee instrument - it justifies its price.
There is more confidence in the products produced in the USA.

Milwaukee tools are made in China   

[themadhippy]

Do you think these countries will agree to be slave labor for a long time?

Is it slave labor if the staff are being paid  more than the countrys minimum wage

[tautech]

I just imposed a series of tariffs on goods made in China:
 
25% on steel and aluminum,
50% on semiconductors,
100% on EVs,
And 50% on solar panels.
 
China is determined to dominate these industries.
I'm determined to ensure America leads the world in them.

This will be interesting how this will help the US reach emission targets from the Paris Accord.

Add that China already has a good amount of the worlds Lithium resources already tied up.
 

[BrianHG]

If you don't like Mexico, there's Canada nearby. 

Labor is expensive in Canada.

It's still ~50% cheaper than in the USA.  And in some cities, we have access to a very high talent pool in engineering and art.

[BillyO]

I have to wonder where this benefits giant American companies like TI and Intel that have a large portion of their manufacturing in China.  Or other giant American companies (pick any 20 or 30 you like) that have designed products around components only made by Chinese companies.  Does this affect only components manufactured in China and not Chinese designed components manufactured elsewhere?  What about Taiwan, or is it only mainland China?  Where does this leave Hong Kong and Macau?  What about components only partially built in China then finished elsewhere?

How in Wan Haung Lo's name are they going to put together a reasonable way to police this and not put American companies over a barrel?

Seems like a bunch of addle-minded politicians and bureaucrats got together and secluded themselves from anyone that could bring a modicum of rationality to this, in order to invent an announcement that might appeal to certain fence-sitting voters.

But seriously, wouldn't something like this be done only after long discussion with the affected parties within the US?

[BillyO]

Fair enough.  A lot of what you say has merit.  Tough love sometimes makes sense.  However, it's usually phased in after other approaches have been tried and failed.  This, and I'm only talking about the tariff on semi-conductors, seems a little sudden.  I can see and fully understand reasons for putting tariffs on products where you have an industry in that vertical to protect/build but to just turn around and pull the rug out from everyone seems a little more like a stunt than a "let's pull our socks up" initiative.  There were reasons the whole semiconductor business was globalized.  I don't see that those reasons have disappeared.  In fact, the supply chain events you speak of were precisely due to the fact that the globalization was allowed to get skewed over time.  Mostly due to corporate greed.

Anyway, I don't see it happening here in Canada.  We don't have a semiconductor industry to protect.  Of course history shows us the US has more power over us than we have over ourselves so I maybe indulging in wishful thinking there.

[forrestc]

The question I asked in another thread recently (and which some have also raised here) remains: what about products *containing* chinese semiconductors, but said semiconductors not imported directly? We need to know.

The US does not tax based on percentage of content.   If I manufacture in Canada, I can use all of the semiconductors from China I want in my Canada-manufactured product and ship it to the US tariff-free (assuming Canada itself doesn't have a similar tariff).

There are of course rules designed to prevent people from gaming the system - i.e. I can't buy a completed product and relabel it in Canada and call it now Canada origin.   That's the only place percentage of content comes into the picture - figuring out what the real country of origin is.

[EEVblog]

If anybody is inclined to answer, may I suggest that this be done via PM. This thread is deep into the territory which, in his opening post, Dave had explicitly asked us to avoid.

You know what's the matter... This is not a political forum, there are sensible people, educated engineers - those who are able to have their own opinion, and not repeat politicians and propaganda. Therefore, this opinion is very interesting. The situation has divided us into different sides. Personally, I am interested in the opinion from the other side. Perhaps my opinion will be interesting too. We live on the same planet...

Please do not encourage political discussion. Those who cannot help themselves, please depart this thread.

[S. Petrukhin]

Do you think these countries will agree to be slave labor for a long time?

Is it slave labor if the staff are being paid  more than the countrys minimum wage

30 years ago it could have been happiness, but now the whole world is transparent and desires are growing.