How the 2024 US Election Could Impact the AI Chip Market

Both US Presidential candidates, former President Donald Trump and Vice President Kamala Harris, have acknowledged the critical role of semiconductors in the digital economy and national security. However, their differing approaches could significantly reshape the global semiconductor landscape.

As the US election approaches, the nation is eager to remain a competitive leader in AI capabilities. In her bid for US presidency, Vice President and Democratic candidate, Kamala Harris, has said she will make sure ‘America, not China, wins the competition for the 21st century.”

On the other hand, Former President and Republican candidate, Donald Trump, has called for higher tariffs as a solution to make the US a chip leader.

The current US chip market

Under President Joe Biden's government, the US has maintained and expanded chip-related policies from the previous administration. 

Biden kept Trump-era tariffs on Chinese imports and added US$18bn in new tariffs on various imports, including semiconductors. The Biden administration also implemented regulations to limit investment in Chinese technology sectors, particularly affecting AI, semiconductor and quantum computing industries.

A cornerstone of Biden's semiconductor strategy was the CHIPS Act, which allocated US$39bn in tax benefits, loan guarantees and grants to incentivise domestic chip manufacturing. 

However, despite these efforts, the US semiconductor industry still heavily relies on manufacturing capabilities from other parts of the world.

In response, Donald Trump has been advocating for a "resurgence of American manufacturing", suggesting implementing high tariffs on computer chips made in other parts of the world. During a recent podcast appearance on The Joe Rogan Experience, Trump accused Taiwan of "stealing America's chip industry". 

He also proposed imposing tariffs on Taiwanese chips if re-elected, stating, "You tariff it so high that they will come and build their chip companies for nothing".

Such a move could have significant implications for global leaders in chip manufacturing, including Taiwan Semiconductor Manufacturing Company (TSMC), which supplies 92% of the US's leading-edge chips and counts Nvidia and Apple among its customers.

Alternatively, Kamala Harris is expected to maintain and build upon the Biden administration's chip strategy. This approach includes continuing to restrict advanced semiconductor exports to China and further implementing the CHIPS and Science Act. 

Harris has emphasised the importance of investing in future industries while supporting traditional economic sectors, stating: “we have to constantly be on top of what is happening, what is current, and investing in industries of the future as well as honouring the traditions and the industries that have built up America's economy.”

Global implications

The outcome of the 2024 US presidential election could have far-reaching consequences for the global semiconductor industry. 

Taiwan, which produces nearly 60% of the world's semiconductor chip supply and 90% of the most advanced chips needed for AI applications, is particularly vulnerable to potential policy shifts.

Both candidates are likely to maintain a tough stance on international chip manufacturing, which could impact global supply chains and potentially increase consumer costs. The election result may also influence the competitive technology landscape and global chip distribution patterns.

As the election draws near, the semiconductor industry remains watchful, aware that the next US president's policies could significantly alter the delicate balance of the global chip market. The implications extend beyond economics, touching on issues of national security, technological advancement and international relations in an increasingly interconnected world.

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