Trump Warns of ‘Fairly Substantial’ Tariff on Semiconductors. What It Means for Chip Stocks.

President Donald Trump has vowed tariffs on chip makers that don’t invest in U.S. manufacturing. (Chip Somodevilla/Getty Images)

President Donald Trump said a tariff on imports of chips is coming “very shortly” for companies that aren’t shifting production to the U.S. However, it seems likely much of the semiconductor sector will be exempted from the levy.

“We will be putting a very substantial tariff, not that high, but fairly substantial tariff with the understanding that if they come into the country, if they are coming in, building, planning to come in, there will not be a tariff,” Trump told reporters ahead of a dinner with tech CEOs at the White House Thursday, without giving further details.

The president has previously said he would impose a 100% tariff on all semiconductor imports, but exempt companies that have promised to onshore manufacturing.

It isn’t yet clear which companies will get the exemption or what levels of investment would be sufficient to gain one. Apple , for example, has pledged to invest $600 billion in domestic manufacturing over four years.

“I would say, [Apple CEO] Tim Cook would be in pretty good shape,” Trump said regarding potential chip tariffs. Apple stock didn’t budge on the comments, sliding less than 0.2% in premarket trading Friday.

The bigger question is if pure-play chip manufacturers like Taiwan Semiconductor Manufacturing , which makes chips for Nvidia , Broadcom and Advanced Micro Devices, and its South Korean peers SK Hynix and Samsung Electronics would be exempt for a potential levy. The companies didn’t immediately respond to a Barron’s request to comment.

Barron’s has previously reported that Taiwan’s National Development Council Minister Liu Chin-ching said that TSMC would be exempted from a specific chip tariff, and that Samsung and SK Hynix wouldn’t be subject to the levy either, as per South Korea’s trade envoy Yeo Han-koo.

That could account for a muted stock reaction. The iShares Semiconductor ETF was up 0.9% in premarket trading.

Write to Elsa Ohlen at elsa.ohlen@barrons.com