Trump’s semiconductor tariffs to have minimal impact on Singapore for now: MTI

SINGAPORE - The recently announced US tariffs on semiconductors will have a negligible impact on Singapore’s chip industry for now, said the Ministry of Trade and Industry (MTI) in response to queries by The Straits Times.

As part of a proclamation signed by US President Donald Trump last week, certain advanced chips and specified derivative products

will now face a 25 per cent tariff when imported into the US.

The levy for now will primarily cover advanced chips such as Nvidia’s H200 and AMD’s MI325X, mostly used in artificial intelligence (AI) data centres and made in Taiwan.

The duty on these chips will be collected when they are taken into the US for final processing before shipment to foreign markets.

MTI told ST: “Our preliminary assessment, in consultation with the industry, is that the first phase of the semiconductor tariffs announced on Jan 14 has minimal impact on Singapore, given that the tariffs apply to a narrow category of semiconductors not currently manufactured in Singapore.”

The US proclamation also stated that the tariff will not apply to chips imported to support the buildout of the US technology supply chain or to bolster the country’s manufacturing capacity for derivatives of semiconductors.

These include products imported for use in data centres, research and development, and non-data centre consumer applications.

Mr Trump is holding off for now on applying tariffs to a broader swathe of foreign-made chips, which may include chips made in Singapore.

Instead, the proclamation instructs Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer to pursue negotiations with trading partners to address semiconductor imports and to report back in 90 days.

These officials will provide an update on the negotiations by July 1.

Depending on those reports, the President may issue “significant additional tariffs” and a potential tariff offset programme to encourage domestic manufacturing, the White House said in a separate statement.

MTI said it will continue to monitor the situation.

Ms Ma Tieying, a senior economist at DBS Bank, said: “The exemption conditions suggest that the Trump administration does not intend to implement blunt semiconductor tariffs that could disrupt AI development, at a time when AI has become a key pillar of US growth.’’

She added: ‘’With the US entering the mid-term election cycle this year, expectations may rise for greater flexibility on tariff policy, as the administration seeks to limit cost pressures on US consumers and maintain voter support.’’

Mr Trump’s proclamation follows a nine-month investigation under Section 232 of the Trade Expansion Act of 1962 and targets a number of high-end semiconductors meeting certain performance benchmarks and devices containing them for import duties.

The chip tariff, according to the Trump administration, is part of a broader effort to create incentives for chipmakers to produce more semiconductors in the US and decrease reliance on chip manufacturers in places like Taiwan and South Korea.

Mr Lutnick on Jan 17 said South Korean memory chipmakers and Taiwanese companies that are not investing in the US may face up to 100 per cent tariffs unless they commit to increased production on American soil.

Taiwan, on its part, concluded a trade pact last week that would lower tariffs on exports to 15 per cent from 20 per cent, and see Taiwanese semiconductor companies increase financing for American operations by US$500 billion (S$642.5 billion).

Separately, Taiwan Semiconductor Manufacturing Company (TSMC) is reported to have committed to building at least four more chipmaking plants in the US – on top of the six already planned – requiring roughly an additional US$100 billion of capital.

Under an accord with South Korea announced in July 2025, the US would charge a tariff of 15 per cent on most goods from the country, while sparing levies on chip imports.

The agreement between Washington and Seoul includes a US$350 billion South Korean fund for US investments. However, those plans are still taking shape, and it is unclear how much more South Korea’s top chipmakers Samsung and SK Hynix will agree to spend in the US beyond their earlier commitments.

Samsung unveiled plans in 2024 to invest more than US$40 billion in the US, including US$17 billion for an advanced packaging facility in Texas for high-bandwidth memory chips.

SK Hynix, meanwhile, has said it intends to spend nearly US$4 billion on advanced packaging in Indiana, part of US$15 billion for production and research in the US.

Experts believe US deals with Taiwan and South Korea would become a template for any future negotiations with other chip-exporting nations.

DBS’ Ms Ma said the semiconductor tariff announcement, together with trade-deal developments, reinforces the bank’s base-case scenario for 2026 of a modest reduction in Taiwan’s reciprocal tariff rate, moderate semiconductor tariffs, and slower but still-resilient AI demand.

Singapore’s semiconductor industry is a key pillar of the Republic’s export-driven manufacturing industry.

Top chipmakers here, such as Micron and GlobalFoundries, are US companies that are already expanding their manufacturing footprint in America.

TSMC is a stakeholder in Singapore chipmakers, including NXP and SMIC, while Taiwan’s UMC, a major chipmaker in Singapore, has also announced plans to invest in the US.