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U.S. chip supply faces tariff risk

CNBC Television • 3:06 minutes • Published 2025-07-16 • YouTube

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📹 Video Information:

Title: U.S. chip supply faces tariff risk
Channel: CNBC Television
Duration: 03:06
Views: 740

Overview

The video discusses recent concerns in the semiconductor and AI hardware sectors, focusing on ASML—the sole global supplier of advanced chipmaking equipment. Despite strong narratives around AI growth and massive investments from companies like Nvidia, Meta, and Google, emerging issues such as tariff uncertainty and supply chain dependencies could threaten the broader technology and AI ecosystem.

Main Topics Covered

  • ASML's unique role in advanced chip manufacturing
  • The impact of tariff uncertainty on the semiconductor industry
  • The strategic importance of onshoring chip production in the US
  • Signs of potential deceleration or instability in the AI hardware supply chain
  • The contrast between bullish AI investment narratives and underlying infrastructure risks

Key Takeaways & Insights

  • ASML as a Choke Point: ASML is currently the only company worldwide that produces the essential tools for cutting-edge semiconductor manufacturing, making it a critical node in the global tech supply chain.
  • Tariff Risks: Tariffs affecting ASML could disrupt chip fab timelines, increase costs, and shift the geographic balance of AI hardware development, potentially undercutting US efforts to become less reliant on Asian manufacturing.
  • Infrastructure Cracks: While AI investment remains strong and optimistic, underperformance from key suppliers like ASML and Hon Hai signals possible friction and complexity beneath the surface.
  • Dependency Danger: If the US cannot reliably secure ASML’s equipment, its ambitions to onshore chip production and reduce foreign dependence may be compromised—ironically increasing reliance on non-US companies like Samsung and TSMC.
  • Potential Policy Response: The US may ultimately exempt ASML from tariffs to protect the interests of domestic tech giants and maintain its competitive edge in AI.

Actionable Strategies

  • Monitor Supply Chain Indicators: Investors and industry watchers should track performance and warning signs from key infrastructure companies, not just end-product or headline AI stocks.
  • Policy Advocacy: Stakeholders in the US tech industry should advocate for exemptions or policy adjustments that ensure uninterrupted access to critical manufacturing equipment.
  • Diversify Supply Partners: Companies should consider diversifying partnerships and supply sources to mitigate risks from single points of failure like ASML.
  • Stay Informed on Global Trade Policy: Keeping abreast of changes in tariff regulations and their impact on hardware supply chains is crucial for strategic planning.

Specific Details & Examples

  • ASML has experienced about a 20% decline over recent months, contrasting with the broader AI sector’s bullish performance.
  • Hon Hai (Foxconn) has also shown month-over-month deceleration in some performance metrics.
  • Mark Zuckerberg (Meta) announced plans to spend hundreds of billions of dollars on compute capacity, including over five gigawatts of infrastructure—signifying immense ongoing investment in AI.
  • Google also recently announced similar large-scale AI infrastructure investments.

Warnings & Common Mistakes

  • Ignoring Upstream Risks: There is a tendency to focus on top-line AI growth stories while overlooking potential bottlenecks and vulnerabilities in the supply chain.
  • Assuming Smooth Regulatory Processes: Assuming that policy exemptions (e.g., for ASML) will automatically be granted could be risky; delays or missteps could have significant repercussions.
  • Overreliance on Single Suppliers: Building industrial strategy or investment portfolios around a single critical supplier (like ASML) without contingency planning is a major vulnerability.

Resources & Next Steps

  • Analyst Reports: The hosts recommend consulting financial analysts for deeper insights into ASML’s stock performance and the broader sector outlook.
  • Ongoing News Monitoring: Stay updated with announcements from major AI investors (Meta, Google, Nvidia) and supply chain companies (ASML, Hon Hai).
  • Industry Events & Policy Discussions: Engage with industry conferences and policy forums focused on semiconductor supply chains, tariffs, and AI infrastructure.
  • Company Disclosures: Review quarterly reports and investor communications from ASML, Hon Hai, Nvidia, TSMC, Samsung, and other key players for the latest data points and guidance.

📝 Transcript (104 entries):

[00:12] tariff uncertainty. Deirdre Bosa here for Techcheck. And Deirdre this is the sort of chip machine maker. So if they're not doing well and it's not just today they've been down like 20% the past few months, then how can the rest of the AI space be doing well. That's exactly the question. ASML is one of one. It [00:29] is the choke point in advanced [00:31] chip manufacturing, the only [00:32] company in the world, in fact, [00:34] that makes the tools needed to [00:35] produce cutting edge semis. So it's warning raises concerns for the broader AI trade, which has largely been smooth sailing lately. Nvidia 4 trillion massive data center build outs, CapEx rising strong sentiment, but now ASML maybe a reminder that friction could be building at the infrastructure level. If fab tools get tangled in tariffs, that could threaten timelines, cost structure, even the geographic balance of AI hardware build out. So that's why you're seeing this news hit not just ASML today, but the semi and tech trade at large potentially cracks in the story. [01:08] Now there could be another [01:10] longer term boomerang impact on [01:12] US chip strategy if Asml's tools [01:14] get caught up in tariffs. That is the strategy is to bring more chip production back onshore to reduce reliance on Asia, push chip manufacturers to build here, build domestic fabs. But those fabs they can't function without ASML gear. And if tariffs slow or complicate those shipments Kelly that undercuts the effort. And it could give non-American companies Samsung TSMC more incentive to expand elsewhere even though they have plans here. So bottom line this [01:40] all risks leaving America [01:41] dependent on foreign supply. Just as AI becomes a strategic asset. Just as we hear from the likes of Meta and Google that have these massive compute build out plans. I mean, two quick thoughts. I can't imagine that the US would do anything to damage Nvidia's prospects. And [01:58] if that means exempting ASML [01:59] from tariffs or something, I [02:01] imagine that would be worked [02:02] out. But the other question I have is why ASML has been underperforming for the past couple of months now. This isn't just a today story. Even while all the rest of the chip trade or the AI trade is taking off. Yeah, and I think that there's been some other signs of this as well. I mean, you look at [02:18] companies like Hon Hai and Month [02:19] over month, some of the numbers [02:21] have been a little bit [02:22] troubling, or maybe just showing [02:24] hints of a deceleration. But you contrast that with what we hear from Mark Zuckerberg earlier this week, that he's going to be spending hundreds of billions of dollars on compute capacity, five gigawatts plus. You had an announcement from Google yesterday. The trade is certainly becoming more complicated. Kelly, I'm not going to claim that I understand everything that's going on. [02:44] Right. There's narrative. But then you see these data points from companies that build the infrastructure like an ASML like a hon hai. So maybe the trade is just becoming a little bit more complicated. And we saw what happened earlier in the year. I [02:58] mean the narrative is bullish [02:59] but maybe some cracks below the [03:02] surface. I'm thinking we need to get a couple of analysts on, follow the stock a